U.S. Producer Price Index Increases; Core Prices Ease

The Producer Price Index for final demand rose 0.2% during July (1.7% y/y) following two months of 0.1% gain. The rise matched expectations in the Action Economics Forecast Survey. Producer prices excluding food & energy slipped 0.1% last month (+2.1% y/y) after a 0.3% strengthening. A 0.2% rise had been expected. The PPI excluding food, beverages and trade services, another measure of underlying price inflation, also edged 0.1% lower (+1.7% y/y) after holding steady in June.

A 2.3% rise (-4.4% y/y) in energy prices added to the PPI increase following two months of subtraction. The rise reflected a 5.2% rebound (-6.7% y/y) in gasoline prices after two months of decline. Home heating oil prices jumped 8.0% (0.2% y/y) following a 5.0% drop. The cost of electric power rose 0.9% (2.2% y/y) following a 0.4% gain. Offsetting these increases was a 1.3% decline (+1.3% y/y) in natural gas prices, which was the fourth consecutive decline.

Food prices edged 0.2% higher (2.5% y/y) following a 0.6% gain. Beef & veal prices increased 1.8% (1.7% y/y) while fish prices rose 3.0% (3.9% y/y). The cost of dairy products rose 0.6% (1.2% y/) and fresh & dried vegetable costs improved 0.3% (43.3% y/y). These increases were offset by a 4.1% decline (-7.2% y/y) in fresh fruit & melon prices. Egg prices were off 8.9% and down by roughly one-half y/y. Oilseed prices eased 0.3% (+2.7% y/y).

Prices for core goods for final demand edged 0.1% higher (1.2% y/y) after holding steady for three straight months. Core finished consumer goods prices rose 0.1% (2.2% y/y) after zero change in June. Core nondurable consumer goods costs also gained 0.1% (2.7% y/y) and durable consumer goods prices improved 0.1% (1.2% y/y) as well. Passenger car prices rose 0.4% both m/m and y/y but appliance prices fell 0.6%. Private capital equipment costs increased 0.2% (2.2% y/y) after two months of 0.1% gain. Government goods prices less food & energy rose 0.2% (1.9% y/y) following two months of 0.1% improvement.

Services prices fell 0.1% (+2.3% y/y), but trade services prices rose 0.2% (3.3% y/y) after strengthening 1.3%. The cost of trade of finished goods rose 0.2% (3.2% y/y) following a 1.4% surge. Passenger transportation fees increased 1.5% (5.5% y/y) and transportation & warehousing costs fell 0.3% (+2.1% y/y). Services prices less trade, transportation & warehousing were off 0.3% (+1.7% y/y).

Construction costs improved 0.6% (5.5% y/y). Private building costs gained 0.6% (5.2% y/y) but government building costs rose 0.4% (6.0% y/y) for a second month.

Prices for intermediate demand increased 0.2% (-2.0% y/y) following three months of decline.

The PPI data can be found in Haver's USECON database. Further detail can be found in PPI and PPIR. The expectations figures are available in the AS1REPNA database.