U.S. Producer Price Inflation Picks Up in May
by:Tom Moeller
|in:Economy in Brief
Summary
- Energy prices continue to strengthen.
- Core goods prices remain strong.
- Services prices improve after an April decline.
Price inflation at the wholesale level remains heated. The Producer Price Index for Final Demand increased 0.8% during May (10.8% y/y) after rising 0.4% in April, revised from 0.5%. These last two gains follow three consecutive months of 1.1%-to-1.6% increase. The latest increase matched expectations in the Action Economics Forecast Survey. The series dates back to November 2009.
Producer prices less food, energy & trade services increased 0.5% (6.8% y/y) in May after increasing 0.4% in April. A 0.6% rise had been expected for the PPI less food & energy.
A 5.0% increase in energy prices (45.3% y/y) led the PPI higher last month. It was the fifth consecutive month of strong increase. Gasoline prices surged 8.4% and were up by two-thirds y/y. Home heating oil prices rose 10.6% (116.8% y/y) and natural gas prices surged 6.2% (29.5% y/).
Food prices were fairly steady during May (13.0% y/y) after significant gains in the prior four months.
The PPI for goods less food & energy gained 0.7% (9.7% y/y) following two consecutive months of 1.1% increase. Prices for final demand finished goods less food & energy increased 0.8% (8.8% y/y). Finished consumer goods prices less food & energy rose 0.9% in May (8.4% y/y) following a 0.6% increase. Durable consumer goods prices rose 0.7% last month (8.9% y/y) after four months of roughly 0.9%. Core nondurable consumer goods prices rose 1.0% (8.1% y/y), the strongest increase in three months. Prices for private capital equipment rose 0.7% (9.3% y/y) after increasing 1.2% in April.
Services prices rose 0.4% during May (7.6% y/y) following a 0.2% April decline. Trade services prices also increased 0.4% last month (13.6% y/y) after falling 0.6%. Services prices less trade, transportation & warehousing edged 0.1% higher in May (3.0% y/y) after falling 0.2% in April.
Construction product prices increased 0.4% in May (19.0% y/y) after surging 3.7% in April.
Intermediate goods prices jumped 2.3% (21.6% y/y) due to a 4.6% gain (47.5% y/y) in processed fuel costs.
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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