U.S. Producer Prices Unexpectedly Fell in October, Led by Gasoline
by:Sandy Batten
|in:Economy in Brief
Summary
- The headline PPI fell 0.5% m/m in October, the largest monthly decline since April 2020.
- Gasoline prices plummeted 15.3% m/m after having risen 25% in the previous two months.
- The core index edged up a less-than-expected 0.1% m/m.
The Producer Price Index for final demand unexpectedly fell 0.5% m/m (+1.3% y/y) in October following a downwardly revised 0.4% monthly gain in September (previously 0.5% m/m). A 0.1% rise had been expected by the Action Economics Forecast Survey. The PPI excluding food and energy prices was unchanged m/m (+2.4% y/y) in October following a downwardly revised 0.2% monthly increase in September (previously 0.3% m/m). A 0.2% gain had been expected. The new core PPI, that is excluding food, energy and trade services prices, rose 0.1% (2.9% y/y), down from a 0.3% monthly increase in the previous month (revised up from 0.2% m/m).
A 6.5% m/m drop in energy prices was the major contributor to the overall decline in October. Energy prices had risen 13.5% over the previous two months. Gasoline prices plummeted 15.3% m/m in October, their biggest monthly decline since July 2022, after having risen 24.8% in the preceding two months. Diesel fuel prices fell 12.0% m/m. Home heating oil prices declined 11.1% m/m while the price of residential natural gas edged down 0.6% m/m. LNG prices fell 6.9% m/m. By contrast, the price of residential electricity edged up 0.1% m/m.
Prices for final demand goods fell 1.4% m/m in October, the first decrease since falling 1.5% in May. The primary factor behind the October decline was the outsized drop in prices of final demand energy with 80% of the overall decline attributable to the drop in gasoline prices. Prices for final demand foods fell 0.2% m/m in October following a 0.7% monthly gain in September (revised down from 0.9%). The index for final demand goods less foods and energy edged up 0.1% m/m.
Prices for final demand services were unchanged in October following six consecutive advances. In October, increases of 1.5% m/m in the index for final demand transportation and warehousing services and 0.1% m/m in prices for final demand services less trade, transportation, and warehousing offset a 0.7% m/m decline in margins for final demand trade services. Within the index for final demand services in October, prices for airline passenger services rose 3.1% m/m.
Construction costs fell 0.4% m/m, the first decline in three months. Intermediate goods prices declined 0.9% m/m, also their first decline in three months.
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.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
