U.S. PPI Strength in September Fueled Again by Energy Prices
by:Tom Moeller
|in:Economy in Brief
Summary
- Higher gasoline & heating oil prices accompany firmer food prices.
- Excluding food & energy, price rise is modest.
- Goods prices edge higher while service prices rise moderately.
The Producer Price Index for final demand rose 0.5% (2.2% y/y) in September following an unrevised 0.7% August increase. A 0.3% rise had been expected in the Action Economics Forecast Survey. The PPI excluding food and energy prices rose 0.3% (2.7% y/y) following a 0.2% rise. A 0.2% gain had been expected. The PPI excluding food, energy and trade services prices rose 0.2% (2.8% y/y) for the second straight month.
A 3.3% gain (-1.1% y/y) in energy prices led the PPI higher last month. Gasoline prices strengthened 5.4% (6.3% y/y). Home heating fuel prices jumped 12.3% (-6.8% y/y) and electric power costs increased 0.8% (5.4% y/y). Working the other way, the price of residential natural gas eased 0.2% (-14.6% y/y); it has been falling since February.
Food prices rose 0.9% (-1.2% y/y) in September. The gain was led by a 2.9% rise (21.6% y/y) in beef & veal prices and an 8.1% increase (-41.4% y/y) in egg prices. Dairy product prices rose 1.3% (-7.1% y/y). These gains were offset by a 13.9% decline (-27.6% y/y) in prices of fresh & dry vegetables and a 5.6% decline (-32.5% y/y) in grain prices.
Prices of final demand goods increased 0.9% (0.8% y/y) in September. Goods prices less food and energy edged up 0.1% (2.0% y/y) for a second consecutive month. Core consumer goods prices increased 0.2% (3.4% y/y) last month while prices of private capital equipment edged up 0.1% (3.6% y/y) for a second straight month. The prices of government purchased goods excluding food & energy prices also edged up 0.1% (0.8% y/y) in September.
Services prices rose 0.3% (2.9% y/y) in September following a 0.2% gain in August. Trade services prices rose 0.5% (2.3% y/y). The final demand price of transportation and warehousing services fell 0.4% (-5.7% y/y) after a 0.3% decline. Final demand services less transportation & warehousing rose 0.3% (4.2% y/y) for the second straight month.
Construction costs rose 0.1% (3.7% y/y) in September for a second consecutive month. Intermediate goods prices rose 0.5% (-3.7% y/y) in September, reflecting a 2.4% (-8.4% y/y) strengthening in processed fuels & lubricants.
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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