Source: PPI / CPI

Nasdaq details:

US PPI increased 0.2% in July, following a -0.4% drop in June, according to data released by the Bureau of Labor Statistics. The result is a notch higher than the expected 0.1%. On an annual basis US PPI increased slightly in July to 7.2% in comparison with 7% registered in June. Analysts expected the indicator to remain unchanged at 7%.

US PPI excluding Food and Energy moved up from 0.3% in June to 0.4% in July, exceeding expectations of a 0.2% rise. On an annual basis US PPI excluding Food and Energy increased to 2.5%, after growing 2.4% in June and above forecasts of 2.3%.

Bloomberg details:

Wholesale costs in the U.S. increased for a seventh consecutive month in January, led by higher prices for fuel.

The producer price index rose 0.8 percent, Labor Department figures showed today in Washington. The figure matched the median forecast in a Bloomberg News survey. The so-called core measure, which excludes volatile food and energy costs, rose 0.5 percent, the biggest rise since October 2008.

Bloomberg details:

Wholesale costs in the U.S. rose in December by the most in 11 months, led by higher prices for commodities such as fuel and food. The producer price index increased 1.1 percent from November, Labor Department figures showed today in Washington. Economists projected a 0.8 percent gain for a second month, according to the median forecast in a Bloomberg News survey. The so-called core measure, which excludes volatile food and energy costs, climbed 0.2 percent, in line with estimates.

Sorry for the lack of posts... my life has been a whirlwind; kind of like the latest producer price index release (how's THAT for a transition).

The Atlantic details:

Is the Fed's new asset purchase program already succeeding in raising inflation? Looking at the latest producer price index (PPI) data implies that it could be. The prices for finished goods that producers face increased by 0.8% in November, according to the Bureau of Labor Statistics. That's the biggest increase since March. Is inflation rising, or is this just a blip?

Since August, there certainly doesn't seem to be much deflationary threat here. The 12-month change in PPI for finished goods is 3.5% as of November.

So what's driving the increase in prices? Food and energy make up a significant influence. Food prices rose by 1.0%, and energy prices were up 2.1%. You have probably noticed the latter driving an increase in prices at the pump. If you exclude those two factors, core PPI for finished goods rose by 0.3%.

Marketwatch details:

U.S. wholesale prices jumped 0.4% in September, mainly because of higher meat and natural gas costs, the government reported Thursday.

Core producer prices, which exclude the volatile food and energy categories, rose 0.1%. The core number tends to draw the most attention of economists.

After the report on wholesale prices as well as rising weekly jobless claims and a growing trade deficit, both bonds and stocks fell. See story on jobless claims.

The Fed is unlikely to let the report stand in the way of another round of bond purchases, economists said.

“Over the last ten months, core prices have increased 0.1% seven times, hardly sufficient to warrant concerns about inflation,” said Dan Greenhaus, chief economic strategist at Miller Tabak.

ABC news reports:

The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate increased 0.4 percent, the largest increase in five months, after gaining 0.2 percent in July.

Analysts polled by Reuters had expected producer prices to rise 0.3 percent last month. In the 12 months to August, producer prices increased 3.1 percent, slowing from the prior month's 4.2 percent increase.

Producer prices last month were bumped up by a 2.2 percent jump in energy costs. Gasoline prices surged 7.5 percent, the largest increase since January, after falling 2.2 percent in July. Food prices fell 0.3 percent after rising 0.7 percent in July.

Stripping out volatile food and energy costs, core producer prices edged up 0.1 percent last month, matching market expectations. Core PPI increased 0.3 percent in July.

Inflation remains muted amid lackluster domestic demand, which is constraining producers' ability to pass on increases to consumers. The Federal Reserve is expected to renew its pledge to keep monetary policy accommodative to support the economic recovery at a regular meeting next Tuesday.

Looking at the details we see the cause of the increase in the PPI... energy.



And this will likely reverse in August as commodities have reverted following the July spike.

Source: BLS

The decline in month over month PPI



Has fed into moderation of the year to year final goods figure

Automated Trader details:

Producer prices ticked down 0.1% in April, under forecasts of a 0.1% rise and following a 0.7% increase in March. Falling prices for finished energy goods and food products sparked the headline turndown, with liquified petroleum gas off 5.8%, natural gas down 1.3%, and gasoline down 2.7%.

Meanwhile, Intermediate goods prices rose 0.8% and crude goods fell 1.2%, pulled down by a 19% drop in natural gas. Headline PPI was 5.5% higher compared to April 2009. Core prices showed a 1% increase from the same month last year.

Marketwatch details:

Higher prices for vegetables helped drive U.S. wholesale prices higher by a seasonally adjusted 0.7% in March, reversing a drop in February, the Labor Department estimated Thursday. The producer price index has risen by 6% in the past year, led by a 23% rise in energy prices, the government agency said.

Excluding often-volatile food and energy prices, the core PPI increased 0.1% in March and is up 0.9% compared with a year earlier. The big story in the March PPI was wholesale food prices, which rose 2.4%, matching the biggest gain in 26 years. Prices of fresh and dried vegetables soared 49.3%, the most in 16 years.

The AP reports:

Marketwatch reports:

Wholesale prices fell a larger-than-expected 0.6% in February after seasonable adjustments, with energy prices falling 2.9%, the Labor Department reported Wednesday. This is the largest decline since last July. The producer price index has risen 4.4% in the past year, the government said.

The core PPI - which excludes food and energy prices - rose 0.1% in February, more than expected. Core prices are up 1.0% in the past year. Economists surveyed by MarketWatch expected a 0.3% fall in the headline PPI and a 0.1% decline in the core rate. The PPI had risen 1.4% in January, while the core rate was up 0.3%.

Of all the information portrayed in the chart below, the most telling is the relatively low year over year headline PPI figure when compared to the spike in energy and materials.

It shows just how powerful the relationship is between the cost of labor and finished goods.

Source: BLS

Marketwatch reports:

U.S. wholesale prices rose a seasonally adjusted 1.4% in January on double-digit increases in gasoline and home heating oil, the Labor Department estimated Thursday. Core prices of finished goods - which exclude food and energy goods - rose 0.3% in January, led by higher prices for light trucks and other capital goods.

The 1.4% increase in the producer price index was higher than the 0.9% gain expected by economists surveyed by MarketWatch. The core rate of 0.3% was also higher than the 0.1% gain expected. The producer price index is up 4.6% in the past year, the largest year-over-year gain since the financial crisis began in late 2008. The core PPI is up 1% in the past year.

Even higher than that 4.6% core rate is the 6.4% year over year increase in finished consumer goods (driven by nondurable goods less foods [i.e. gasoline]). My view is this still largely a reflection off of extreme lows seen a year ago, but the question is will shrinking excess capacity on the margin and overall capacity was taken out of the system drive further increases? My guess is no, but this will be interesting to watch in the coming months.

Year over Year


Month over Month

Source: BLS

The BLS reports:

The Producer Price Index for Finished Goods moved up 0.2 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed a 1.8-percent advance in November and a 0.3-percent increase in October. At the earlier stages of processing, prices received by producers of intermediate goods rose 0.5 percent and the crude goods index moved up 1.0 percent. On an unadjusted basis, prices for finished goods advanced 4.4 percent in 2009, after falling 0.9 percent in 2008.

Marketwatch reports:

Briefing detailed the latest PPI release:

The producer price index rose 0.3% in October, well below the consensus expectation of an increase of 0.5%.

Excluding food and energy prices, core PPI fell an astounding 0.6% over the month. For the year, core PPI has only increased 0.7% after posting a 1.4% year-over-year increase in September.

On the surface, the numbers would suggest an increasingly deflationary environment. However, the data for October was skewed.

The decline in core prices was due to large drops in vehicle prices. Passenger car prices declined 0.5% month-over-month after increasing 1.0%. Light truck prices fell 5.2% and heavy trucks prices declined 0.1%.

The information on the decline in motor vehicle prices is sketchy. New 2010 model year vehicle prices were introduced in this month's PPI report. The drop in price would suggest that car manufacturers are planning on introducing new model vehicles at lower price points. If this hold true, prices should hold at these levels through next summer.

Core was cut by -5.2% in light trucks and -0.5% in cars where quality changes/model year changes and slack demand cut prices. The Bureau of Labor Statistics said the value of quality changes for 2010 model cars was $250 and for light trucks $793, less than usual, and that this pricing was adjusted out.

Substitute 'United States' for 'European Union' and you'll get an idea of why the Fed will not be raising rates this afternoon.

Forbes details:

Producer prices in the 16 countries using the euro fell 0.4 percent against August, leaving them 7.7 percent lower than a year earlier, European Union statistics agency Eurostat said.

Cheaper oil served as the main reason behind the monthly and annual declines as energy costs fell 1.9 percent against August and 17.6 percent compared with September 2008.

Producer prices are important to the European Central Bank because they show inflationary pressure, or the reverse, early in the pipeline. Economists say many companies cannot raise prices because of excess capacity and intense competition.

The ECB, which meets to decide on interest rates on Thursday, wants annual consumer price inflation to be just below 2 percent but it was at -0.1 percent in October, the fifth straight month of falling prices.

NY Times details:

Even as investors were bidding up the prices of commodities like oil and gold last month, wholesale prices in the United States were falling, reflecting weak demand at home.

The government’s Producer Price Index fell 0.6 percent in September after rising by 1.7 percent a month earlier, the Labor Department reported on Tuesday. The figures show that, despite a weakening dollar, inflation remains a remote concern as the American economy struggles to pull itself out of a deep recession.

“The demand for goods is still very soft; the United States economy is just barely recovering,” said Allen Sinai, president of Decision Economics. “In a weak economy where consumer spending is weak, businesses have been slashing left and right. This surprisingly deflationary result reflects that.”

Food and energy prices fell for the month, and prices were sharply lower than last year, when the financial crisis deflated a commodities bubble that had lifted gasoline prices to $4 a gallon and sent the dollar to record lows. In September, producer prices were down 4.8 percent from a year ago, and prices paid by consumers were 1.3 percent lower.