U.S. Producer Prices Remain Unchanged; Core Index Up 0.1%

The overall Final Demand Producer Price Index held steady during August (1.8% y/y) following an unrevised 0.1% uptick in July. A 0.1% rise was expected in the Action Economics Forecast Survey. Prices excluding food & energy gained 0.1% (1.8% y/y) and matched expectations.

Goods prices (34% of the total index) declined 0.3% (+1.7% y/y). A 1.5% fall (+0.2% y/y) in energy prices held back the overall index increase. Home heating oil prices fell 5.7% (-7.1% y/y) while natural gas prices were off 4.5% (+6.6% y/y). Gasoline prices were off 1.4% (-3.1% y/y) and electric power costs slipped 0.2% (+3.9% y/y). Finished food prices declined 0.5% (+3.8% y/y), the third drop in four months. Egg prices plummeted 21.5% (+2.0% y/y) while beef & veal prices edged 0.3% higher (28.6% y/y). That followed the 9.2% July upward surge. Dairy product prices gained 0.3% (12.5% y/y). Final demand prices for goods excluding food & energy remained unchanged (1.6% y/y) after a 0.2% gain during July. Passenger car prices declined 0.2% (+1.0% y/y). Private capital equipment prices held steady (1.5% y/y).

Services prices (64% of the total index) gained 0.3% (1.9% y/y) after a 0.1% uptick. Prices for transportation of passengers jumped 1.6% (4.3% y/y). Prices for transportation and warehousing of goods for final demand ticked 0.1% lower (+2.5% y/y).

Construction prices for final demand (2% of the total index) remained unchanged (3.2% y/y) following following a 0.5% jump.

Intermediate demand prices of processed goods fell 0.3% (+1.3% y/y) after a 0.1% uptick.

Measured using the old formula, which is being phased out as the headline series, producer prices declined 0.4% (+2.3% y/y) after a 0.1% July uptick. Food costs retreated 0.4% (+5.0% y/y) while energy prices declined 1.4% (+0.8% y/y). Prices excluding food & energy nudged 0.1% higher (1.9% y/y) for a second straight month.

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.

The price for a gallon of regular gasoline held steady last week at $3.46. It's been near that level for four weeks but was off 3.6% y/y. To account for seasonal patterns, Haver Analytics constructs factors for adjustment of pump prices. The adjusted price slipped to $3.33 per gallon, the lowest level since May 2013.

WTI crude oil prices reversed the prior week's increase and fell to $94.05 per barrel (-13.5% y/y), the lowest level since late November. The seasonally adjusted price generated by Haver declined to $94.85 per barrel. Yesterday, prices fell to $92.66. Brent crude oil prices edged up to $100.72 per barrel last week (-12.8% y/y) and were $99.13 yesterday.

Natural gas prices slipped last week and averaged $3.92 per mmbtu (+7.5% y/y), the highest level since mid-July. Yesterday, prices slipped to $3.85.

The demand for all petroleum products increased 2.7% in the week ended August 29 versus a year earlier. Gasoline demand slipped 0.7% y/y. Residual fuel oil needs, used for heating, fell 32.1% y/y while distillate demand improved 5.1% y/y. Inventories of crude oil and petroleum products eased 0.1% y/y and gasoline inventories were down 2.8% y/y.

The energy price data are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY database. The daily figures are in DAILY and the petroleum demand and inventory figures are in OILWKLY.