Global| Jan 15 2015U.S. Producer Price Index Falls With Oil and Food Prices; Shows Upward Pressure Elsewhere
by:Tom Moeller
|in:Economy in Brief
Summary
The overall Final Demand Producer Price Index fell 0.3% during December (+1.1% y/y) and followed an unrevised 0.2% November decline. A 0.4% decline was expected in the Action Economics Forecast Survey. Prices excluding food & energy [...]
The overall Final Demand Producer Price Index fell 0.3% during December (+1.1% y/y) and followed an unrevised 0.2% November decline. A 0.4% decline was expected in the Action Economics Forecast Survey. Prices excluding food & energy increased 0.3% (2.1% y/y) following no change. A 0.1% uptick was expected. For the full year, the PPI gained 1.6%; excluding food & energy, prices rose 1.7%.
Services prices (64% of the total index) gained 0.2% (2.2% y/y) after a 0.1% uptick. Final demand trade services prices surged 0.6% (4.2% y/y) following a 0.1% uptick but prices for transportation of passengers were unchanged (-1.8% y/y). Prices for transportation and warehousing of goods for final demand fell 0.2% (+1.4% y/y).
Remaining unchanged for the second consecutive month were construction prices for final demand (2% of the total index). They improved 2.1% y/y helped by a 0.5% October surge.
Final demand goods prices (34% of the total index) declined 1.2% (-1.2% y/y), led lower by a 6.6% decline (-13.3% y/y) in energy prices. Gasoline prices were off 14.5% (-27.5% y/y) while home heating oil prices declined 15.9% (-32.0% y/y). Electric power costs slipped 0.1% (+3.3% y/y) but natural gas prices rebounded 3.2% (6.3% y/y). Finished food prices declined 0.4% (+4.2% y/y) following a 0.2% fall. Beef & veal prices slipped 0.3% (+24.2% y/y) and dairy product prices declined 4.2% (+2.1% y/y).
Final demand prices for goods excluding food & energy improved 0.2% (+1.6% y/y), the first rise in three months. Passenger car prices rose 0.2% (1.0% y/y) following no change while furniture prices increased 0.2% (1.3% y/y) after two months of 0.1% gain. Private capital equipment prices rose 0.2% (1.1% y/y) after a 0.1% slip.
Intermediate demand prices of processed goods were off 1.7% (-2.3% y/y), the fifth straight month of decline.
Measured using the old formula, which is being phased out as the headline series, producer prices fell 1.3% (-0.7% y/y), the largest of five consecutive monthly declines. Food costs moved 0.5% lower (+5.4% y/y) for a second straight month while energy prices declined 6.1% (-11.7% y/y). Prices excluding food & energy improved 0.3% (1.8% y/y).
The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. The expectations figure is available in the AS1REPNA database.
| Producer Price Index (%) | Dec | Nov | Oct | Dec Y/Y | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Final Demand | -0.3 | -0.2 | 0.2 | 1.1 | 1.6 | 1.3 | 1.9 |
| Excluding Food & Energy | 0.3 | 0.0 | 0.4 | 2.1 | 1.7 | 1.5 | 1.9 |
| Goods | -1.2 | -0.7 | -0.4 | -1.0 | 1.3 | 0.8 | 1.7 |
| Foods | -0.4 | -0.2 | 1.0 | 4.4 | 3.2 | 1.7 | 3.0 |
| Energy | -6.6 | -3.1 | -3.0 | -12.9 | -1.0 | -0.8 | 0.2 |
| Goods Excluding Food & Energy | 0.2 | -0.1 | -0.1 | 1.3 | 1.5 | 1.1 | 1.8 |
| Services | 0.2 | 0.1 | 0.5 | 2.2 | 1.8 | 1.6 | 1.9 |
| Construction | 0.0 | 0.0 | 0.5 | 2.1 | 3.0 | 1.8 | 2.9 |
| Intermediate Demand - Processed Goods | -1.7 | -1.0 | -0.9 | -2.2 | 0.6 | 0.0 | 0.5 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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