U.S. PPI & Its Core Index Firm in October
by:Tom Moeller
|in:Economy in Brief
Summary
- Price increase in core goods strengthens.
- Gain in services prices picks up.
- Food & energy prices fall.
The Producer Price Index for final demand increased 0.2% (2.4% y/y) during October after rising 0.1% in September, revised from unchanged, and 0.2% in August, according to the Bureau of Labor Statistics. The reading matched expectations in the Action Economics Forecast Survey. Producer prices excluding food, energy & trade services rose 0.3% (3.5% y/y) following an unrevised 0.1% September uptick and 0.2% rise in August. The PPI excluding food & energy rose 0.3% (3.1% y/y) after increasing an unrevised 0.2% in September.
Final demand goods prices excluding food & energy rose 0.3% in October (2.2% y/y) after a 0.1% September increase, revised from 0.2%. Core finished consumer goods prices increased 0.1% (2.3% y/y) after rising 0.2%. The increase in core nondurable goods prices moderated to 0.1% last month (2.8% y/y) from 0.2%. Durable consumer goods prices improved 0.1% (1.5% y/y) after rising 0.2% in September. Capital equipment prices rose 0.2% last month (2.6% y/y), the same as during the prior two months. Government-purchased goods prices edged 0.1% higher (2.1% y/y) following a 0.2% gain.
Final demand services prices rose 0.3% (3.5% y/y) in October, after increasing an unrevised 0.2% in September. Trade services prices edged 0.1% higher (1.8% y/y) after rising 0.3%. Trade of finished goods prices held steady (+1.5% y/y) following a 0.5% increase. Prices for final demand transportation and warehousing services gained 0.5% last month (0.1% y/y) after holding steady. Services prices less these costs rose 0.3% in October (4.6% y/y) after edging 0.1% higher in September.
Food prices fell 0.2% (+2.7% y/y) during October after strengthening 1.0% in September. Fruit & melon prices declined 3.3% (+7.8% y/y) following an 8.3% jump. Grain prices fell 1.8% (-17.6% y/y) but processed fruit & vegetable costs improved 0.6% (2.2% y/y). Beef & veal prices increased 6.7% (4.2% y/y) after rising 1.5% in September. Fresh egg prices fell 22.0% (+98.2% y/y) following a 6.2% decline. Fresh vegetable costs rose by 2.3% (12.1% y/y) and reversed the 2.5% September decline.
Final demand energy prices declined 0.3% last month (-8.6% y/y) after falling 2.8% in September. Gasoline prices weakened 0.9% (-13.3% y/y) after a 5.3% decline. Home heating oil prices fell 5.5% (-27.9% y/y) following a 7.5% decline. Electric power prices eased 0.5% (+1.2% y/y) in October after rising 1.5% in September. Natural gas prices rose 0.9% (2.5% y/y), the same as in the prior month.
Construction costs eased 0.2% in October (+1.4% y/y) after a 0.1% improvement in September.
Prices for intermediate demand of processed goods eased 0.5% (-1.2% y/y) in October after falling 0.8% in September. Processed energy goods prices increased 1.2% following a 4.5% fall, while food prices edged 0.1% higher after a 1.0% increase.
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.
