Tag Archives: Producer Price Index

Producer prices rise 0.3% on higher food prices

Producer prices in the U.S. reversed course from March and climbed to a higher than expected 0.3% in April, according to the Labor Department’s Producer Price Index (PPI) report on Thursday. The PPI measures prices at the factory door and inflation pressures before they reach the consumer.

In March, cheaper energy pushed down prices by 1.2%, leading to renewed fears of accelerating deflation. In April, the government data shows that a 1.5% increase in the cost of food offset a 0.1% fall in energy prices — energy costs were down 5.5% in March. And with that, some of the deflationary steam has been evaporated. Deflation is a persistent decrease in general prices, or the opposite of inflation.

"It’s impossible to see how deflation can persist given the amount of liquidity in the system," Maxwell Clarke, chief U.S. economist at 4Cast.com in New York, was quoted on Bloomberg. "With oil moving back up, the thought in people’s minds becomes that inflation could ultimately become a problem that outweighs deflation."

It is worth noting that the PPI index has fallen 3.7% when compared to the same period last year, marking the biggest year-over-year fall since January 1950. Continue reading Producer prices rise 0.3% on higher food prices

Cheap energy pushes producer prices down 1.2%

U.S. Producer prices fell 1.2% in March as lower energy prices drove down costs more than expected, according to a Labor Department report released Tuesday.

The Producer Price Index (PPI) measures prices at the factory door and inflation pressures before they reach the consumer. In a reversal after two months of gains, the latest PPI figures again raise notes of deflationary concern for some economists. However, they are outweighed by the Fed’s mission to spur economic activity.

"Clearly, deflation is a concern right now, though the biggest worry is to restore growth," Anika Khan, an economist at Wachovia Corp. in Charlotte, North Carolina, was quoted on Bloomberg. With inflation contained, "it gives the Fed more room to try to restore growth."

Deflation is a persistent decrease in general prices, or the opposite of inflation. Falling prices may seem like good news for consumers, but only to a certain extent. If prices mark sustained deflationary levels that strike below the cost to produce goods and services, further economic turmoil can ensue with production cuts, payroll reductions and deepening unemployment. Continue reading Cheap energy pushes producer prices down 1.2%

Producer prices up 0.1% in February, less than expected

U.S. Producer prices climbed 0.1% in February as higher energy prices weighed into the increase for the second consecutive month, according to a Labor Department report released Tuesday.

However, the increase was less than expected, with analysts forecasting a 0.4% rise in the government’s Producer Price Index (PPI), which measures prices at the factory door and inflation pressures before they reach the consumer.

"There’s just a huge amount of slack now in the U.S. economy and the global economy" that’s keeping prices down, said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. "That’s going to hang around for some time."

The PPI rose 0.8% in January, which was the first increase since August 2008. Continue reading Producer prices up 0.1% in February, less than expected

Producer prices rise 0.8% in January, higher than expected

Producer prices rose 0.8% in January, reversing a five-month trend due to increased costs in energy, according to a Labor Department report released Thursday.

The Producer Price Index (PPI), which measures prices at the factory door and inflation pressures before they reach the consumer, topped forecasts that projected a climb from 0.3% and 0.4%. Many economists tend to think the price increases are temporary.

"It is doubtful that the price increases will be able to stick given the weakening economy and rising unemployment," said James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who projected wholesale prices would rise 0.9 percent. While "inflation hasn’t collapsed yet, the big concern still is that inflation will fall too much," he said.

Some Federal Open Market Committee (FOMC) members — who set federal fund interest rates — agree. Continue reading Producer prices rise 0.8% in January, higher than expected

Producer prices fall 1.9% in December, driven by lower energy costs

Producer prices fell for the fifth consecutive month in December, as tumbling energy prices again led the decline, according to a Labor Department report released Thursday.

The Producer Price Index (PPI), which measures prices at the factory door and inflation pressures before they reach the consumer, fell 1.9%.

The December drop was in line with many expectations, yet slightly lower for other economists who forecasted a fall matching November’s 2.2% decline. The index registered its biggest monthly decline ever in October by falling a record 2.8%.

"The recession will continue through most of the year, and in this environment, producer prices can only move downward," Sal Guatieri, an economist at BMO Capital Markets in Toronto, was quoted at Bloomberg.

The energy index fell 9.3 percent in December after plummeting 11.2% in November and 12.8% in October, which set a 22-year record. Crude goods fell 5.3 percent compared to November’s 12.5% decline and October’s 18.6% drop. Continue reading Producer prices fall 1.9% in December, driven by lower energy costs

Producer prices drop 2.2% in November

Producer prices fell sharply in November as energy prices plunged for the fourth consecutive month, the Labor Department reported Friday.

The Producer Price Index (PPI), which measures prices at the factory door and inflation pressures before they reach the consumer, fell steeper than expected to 2.2%. Economists had pegged a predictive 2.0% rise. The index registered its biggest monthly decline ever in October, falling a record 2.8%.

Plummeting energy prices again led the way in dragging prices down. The energy index fell 11.2% after a 12.8% drop in the previous month which set a 22-year record. Crude goods declined 12.5% following a 18.6% drop in October.

The consecutive declines further highlights free-falling crude-oil prices, which closed Thursday in New York at $47.98 a barrel — a far distance from its record highs near $147 per barrel in July when inflation peaked.

Continue reading Producer prices drop 2.2% in November

Producer prices set record drop of 2.8% in October

Producer prices plunged in October for the third straight month and by a level never before on record, the Labor Department reported Tuesday.

The Producer Price Index (PPI), which measures prices at the factory door and inflation pressures before they reach the consumer, plummeted 2.8%. Forecasters were expecting a 1.9% reduction, which would have itself broke the last record one-month drop of 1.6% in October 2001, or right after the September 11 terrorist attacks.

Similar to September’s 0.4 % fall, diving energy prices were the key to October’s PPI decline. Energy prices plunged 12.8% in the month after falling 2.9% in September. That marks the biggest one-month drop since July 1986.

Continue reading Producer prices set record drop of 2.8% in October

Producer prices fall for second straight month

Producer prices fell in September with lower energy prices, and dropped for the second consecutive month, the Labor Department reported Wednesday.

The Producer Price Index (PPI), which measures prices at the factory door and inflation pressures before they reach the consumer, decreased in September to 0.4%. The drop was in line with analysts’ expectations. September’s decline follows a 0.9% drop in August and a 1.2% increase in July — a month that marked a 27-year high.

Falling energy prices was the key to easing price pressures as highlighted by the stark contrast of Tuesday’s Nymex crude-oil price of $78.63 per barrel compared to a record high near $147 per barrel in July. Energy prices fell 2.9 percent in September after tumbling 4.6 percent in August — a month that marked the biggest drop in nearly two years.

Continue reading Producer prices fall for second straight month

Fed chief Bernanke forecasts moderate inflation

Federal Reserve Chairman Ben Bernanke said inflation was on track to ease later this year and next. Bernanke made the comments Friday at an economic conference before leading economists and policymakers in Jackson Hole, Wyoming.

Decreasing commodity prices, increased stability of the dollar, and slower growth were cited reasons for the improved outlook.

"If not reversed, these developments, together with a pace of growth that is likely to fall short of potential for a time, should lead inflation to moderate later this year and next year," Bernanke said.

Continue reading Fed chief Bernanke forecasts moderate inflation

Growing inflation: Wholesale prices jump to highest annual rate in 27 years

The Producer Price Index (PPI), which measures prices at the factory door and inflation pressures before they reach the consumer, jumped 1.2% in July and 9.8% in the past year, according to a Labor Department report released Tuesday.

The 1.2% climb was double the rate economists expected and follows a 1.8% jump in June and a 1.4% rise in May. Core producer prices, which exclude food and energy, jumped 0.7 percent in July after a 0.2 percent June increase.

The rise in wholesale prices marks the highest annual rate since June 1981, or 27 years.

Continue reading Growing inflation: Wholesale prices jump to highest annual rate in 27 years