U.S. Producer Prices Rise Modestly in October
by:Tom Moeller
|in:Economy in Brief
Summary
- Energy prices jump & food prices rise moderately.
- Core goods prices ease.
- Services prices also slip.
The Producer Price Index for Final Demand increased 0.2% during October after a similar September gain, revised from 0.4%. The unchanged August reading was revised from -0.2%. During the last 12 months, the PPI increase has moderated to 8.0% from an 11.7% March peak. A 0.4% October gain had been expected in the Action Economics Forecast Survey.
The Producer Price Index less food, energy & trade services increased 0.2% last month (5.4% y/y) following a 0.3% September rise, revised from 0.4%. The 0.2% August gain was unrevised. Core prices peaked at a 7.0% y/y rate of increase in both November & December of last year. The PPI excluding just food & energy rose 0.2% last month. A 0.3% increase had been expected.
The rise in the PPI last month was led by a 2.7% gain (21.8% y/y) in energy prices which followed a 0.6% September rise. Gasoline prices rose 5.7% (17.9% y/y). Home heating oil prices surged 9.4% (62.2% y/y). Natural gas costs declined 2.1% (19.0% y/y) and was offset by a 2.0% rise (14.1% y/y) in electric power costs.
Food prices rose 0.5% last month (12.7% y/y) after they strengthened 1.3% in September. Fresh & dried vegetable prices surged 22.4% (45.8% y/y) while egg prices strengthened 15.0% (157.9% y/y). Fresh fruit & melon prices increased 11.5% (34.5% y/y). Dairy product prices rose 0.8% (17.9% y/y) but beef & veal prices weakened 2.1% (-15.9% y/y).
The PPI for goods less food & energy eased 0.1% (+6.6% y/y) in October after holding steady in September. Finished consumer goods prices less food & energy increased 0.2% (7.7% y/y) for the second straight month. Durable consumer goods prices eased 0.1% (+6.7% y/y) while core nondurable consumer goods prices rose 0.3% (8.2% y/y). Prices for private capital equipment improved 0.3% in October (8.5% y/y) for a second straight month. Core government goods prices held steady (8.0% y/y) for a third consecutive month.
Services prices eased 0.1% (+6.3% y/y) in October after rising 0.2% in September. Trade services prices declined 0.5% (+11.1% y/y) after falling 0.3% in September. Transportation & warehousing services costs fell 0.2% (+16.1% y/y) but passenger transportation prices surged 2.1% (30.4% y/y). Services prices less trade, transportation & warehousing improved 0.2% (3.0% y/y) after rising 0.5% in September.
Construction product prices strengthened 2.9% in October (19.6% y/y) after rising 0.3% in September and 0.2% in August. Construction product prices for private capital investment rose 2.9% (20.7% y/y) and government construction costs gained 2.8% (17.4% y/y).
Intermediate goods prices fell 0.2% (+10.1% y/y) in October after holding steady in September. Processed energy goods prices at the intermediate level increased 1.7% after a 2.2% September gain.
The PPI data are published by the Bureau of Labor Statistics and can be found in Haver's USECON database. Further detail is contained in PPI and PPIR. The expectations figures are available in the AS1REPNA database.
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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