U.S. Producer Price Rise Is Double Expectations in January
by:Tom Moeller
|in:Economy in Brief
Summary
- Core goods prices jump again.
- Service prices remain strong.
- Energy & food prices reverse earlier declines.
Pricing power at the wholesale level strengthened last month. The Producer Price Index for Final Demand increased 1.0% (9.7% y/y) during January following a 0.4% December gain, revised from 0.2%. Earlier figures also were revised. A 0.5% January increase had been expected by the Action Economics Forecast Survey. The PPI excluding food and energy rose 0.8% (8.3% y/y) after rising 0.6% in December, revised from 0.5%. Expectations had been for a 0.4% gain. The PPI less food, energy and trade services jumped 0.9% (6.9% y/y) after increasing an unrevised 0.4% in December. These series date back to 2010.
Higher energy prices led last month's increase in the PPI with a 2.5% increase (28.8% y/y) following a 1,7% December weakening. Gasoline prices rose 1.9% (53.3% y/y) and reversed December's decline. Home heating oil prices strengthened 7.3% (47.4% y/y) and reversed two consecutive months of decline. Natural gas prices rose 0.5% last month (25.1% y/y) and the cost of electric power increased 0.5% (6.5% y/y).
Food prices increased 1.6% (12.8% y/y) after easing 0.3% in December. Beef & veal prices surged 6.5% (43.9% y/y) and the cost of dairy products increased 4.5% (12.3% y/y). Vegetable prices rose 8.0% y/y while egg prices strengthened 40.9% y/y.
Final demand for goods prices less foods & energy rose 0.8% (9.4% y/y) after a 0.4% December rise. Finished consumer goods prices less good & energy rose 0.9% in January (7.1% y/y) following a 0.6% rise. Durable consumer goods prices surged 1.0% last month (7.8% y/y) after rising 0.4% in December. The gain was the strongest since October 2008. Core nondurable consumer goods prices improved 0.8% (6.7% y/y) following two months of 0.7% increase. Prices for private capital equipment jumped a record 1.1% (6.6% y/y) after a 0.5% December gain.
Services prices rose 0.7% in January (7.7% y/y) for the second straight month. Trade services prices rose 0.6% (13.3% y/y). Services prices less trade, transportation & warehousing rose 0.9% in January (4.4% y/y) following a 0.2% increase in December.
Construction product prices surged 3.6% (16.1% y/y) following a 0.3% gain. Construction costs for private capital investment rose 4.1% (17.7% y/y) after two months of 0.4% increase.
Intermediate goods prices jumped 1.7% (+24.1% y/y) due to a 3.4% gain (+34.9% 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.
The Effects of the "Great Resignation" on Labor Market Slack & Inflation from the Federal Reserve Bank of Chicago is available here.
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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