U.S. PPI Declines in March
by:Tom Moeller
|in:Economy in Brief
Summary
- Weakness lowers y/y gain to two-year low.
- Core goods inflation is steady; services prices fall.
- Energy prices tumble; food prices rise.
The Producer Price Index for final demand declined 0.5% (+2.7% y/y) during March after holding steady in February. No change had been expected in the Action Economics Forecast Survey. The PPI excluding food & energy fell 0.1% after two consecutive 0.2% increases. The 3.4% y/y increase was the weakest in two years. A 0.2% rise had been expected. The PPI less food, energy & trade services edged 0.1% higher (3.6% y/y) after increasing 0.2% in February.
Energy prices declined 6.4% (-7.2% y/y) after easing 0.3% in February. Gasoline prices declined 11.7% (-19.2% y/y) while the costs of home heating oil weakened 4.6% (-21.4% y/y). The cost of natural gas declined 7.1% (+7.3% y/y).
Food prices moved up 0.6% last month (5.1% y/y) after falling 2.2% in February. Beef & veal prices rose 1.5% (4.6 % y/y) while egg prices surged 33.9% (116.1% y/y). Dairy product prices fell 2.0% (-3.9% y/y). Fresh fruit prices fell 3.2% (+9.2% y/y).
The rise in the core PPI reflected a 0.3% increase (4.3% y/y) in goods prices less food & energy. Core consumer goods prices rose 0.3% (6.1% y/y) following a 0.4% rise. The cost of core nondurable consumer goods increased 0.3% (7.1% y/y) while durable consumer goods prices improved 0.2% (4.6% y/y). Private capital equipment prices rose 0.5% (6.8% y/y). The cost of government-purchased goods less food & energy increased 0.2% (3.7% y/y).
Services prices declined 0.3% (2.8%) in March following a 0.1% uptick. Trade services fell 0.9% (2.4% y/y), off for the second month in the last three. The price of transportation & warehousing of finished goods for final demand declined 1.3% (+0.5% y/y), off for the third month in the last four. Services prices less these costs edged 0.1% higher (3.1% y/y) after rising 0.3%.
Construction costs rose 0.2% (15.6% y/y) following no change in February. Intermediate goods prices fell 1.0% in March (17.0% y/y) following a 0.4% decline.
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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