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Economy in Brief

U.S. Producer Prices Rise Minimally
by Tom Moeller  July 13, 2017

The headline Final Demand Producer Price Index improved 0.1% during June (2.0% y/y) after May's stability. No change in the index had been expected in the Action Economics Forecast Survey. During the first six months of 2016, the index rose at a 2.7% annual rate. The PPI excluding food & energy rose 0.1% last month (1.9% y/y) following a 0.3% rise. A 0.2% gain had been expected. During the last six months, core prices rose at a 2.5% rate.

An updated measure of core producer price inflation is the overall index excluding food, energy and trade services. It rose 0.2% last month (2.0% y/y) following a 0.1% dip. During the last six months, the index rose at a 2.3% annual rate.

Final demand goods prices improved 0.1% (2.2% y/y) following a 0.5% decline. The price index excluding food & energy increased a steady 0.1% (2.1% y/y).

A 0.5% decline in energy prices (+4.1% y/y) followed a 3.0% May drop. Gasoline prices fell 1.1% (-0.5% y/y), the fourth decline in the last five months. Home heating oil prices were off 1.3% (+2.7% y/y), down for the fifth straight month. Natural gas prices eased 0.2% (+13.7% y/y), the first decline since December. Electric power costs held steady (+3.7% y/y). Food prices increased 0.6% (1.1% y/y) after a 0.2% drop. Beef & veal prices gained 7.0% (6.6% y/y) as egg prices improved 0.7% (24.5% y/y). Dairy product prices increased 1.8% (5.7% y/y) while fresh fruit & vegetable costs declined 3.8% (+4.3% y/y).

Nondurable consumer goods prices less food & energy rose 0.3% (3.4% y/y) after two months of 0.4% gain. Durable consumer goods prices rose 0.2% (1.0% y/y) following a 0.1% decline. Capital equipment gained 0.2% (0.8% y/y) after falling 0.1%.

Final demand for services prices increased 0.2% (1.9% y/y), the weakest increase in four months. Trade services prices fell 0.2% (+1.1% y/y) following a 1.1% strengthening. Private passenger transportation prices fell 0.7% (+2.0% y/y), the fourth decline this year.

Final demand construction prices rose 0.2% (1.2% y/y) as prices for private capital investment improved 0.1% (1.3% y/y). Prices for public investment gained 0.3% (1.1% y/y).

Prices for intermediate demand for goods declined 0.2% (+3.8 y/y) following a 0.1% increase.

The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

Producer Price Index (SA, %) Jun May Apr Jun Y/Y 2016 2015 2014
Final Demand 0.1 0.0 0.5 2.0 0.5 -1.0 1.8
   Excluding Food & Energy 0.1 0.3 0.4 1.9 1.3 0.8 1.8
   Excluding Food, Energy & Trade Services 0.2 -0.1 0.7 2.0 1.2 0.6 1.2
   Goods 0.1 -0.5 0.5 2.2 -1.5 -4.9 1.4
      Foods 0.6 -0.2 0.9 1.1 -3.2 -3.1 3.7
      Energy -0.5 -3.0 0.8 4.1 -8.2 -25.6 -3.2
    Goods Excluding Food & Energy 0.1 0.1 0.3 2.1 0.8 0.4 1.6
   Services 0.2 0.3 0.4 1.9 1.5 1.0 1.9
      Trade Services -0.2 1.1 -0.3 1.1 1.5 1.4 2.0
   Construction 0.2 0.1 0.4 1.2 1.3 3.2 1.9
Intermediate Demand - Processed Goods -0.2 0.1 0.5 3.8 -5.7 -14.0 1.1
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