Producer Price Index Hints Toward a Change in Inflation
The Producer Price Index for finished goods decreased a seasonally adjusted 0.4 percent in June, the U.S. Bureau of Labor Statistics reported today. This decline followed increases of 0.2 percent in May and 0.8 percent in April.
At the earlier stages of processing, prices received by manufacturers of intermediate goods were unchanged in June, and the crude goods index moved down 0.6 percent. On an unadjusted basis, prices for finished goods climbed 7.0 percent for the 12 months ended June 2011.
In June, the decline in finished goods prices can be attributed to the index for finished energy goods, which decreased 2.8 percent. By contrast, prices for finished goods less foods and energy and for finished consumer foods moved up 0.3 percent and 0.6 percent, respectively.
Finished energy: The index for finished energy goods fell 2.8 percent in June, the largest drop since a 4.7-percent decrease in July 2009. In June, prices for gasoline moved down 4.7 percent and accounted for two-thirds of the monthly decline. Decreases in the indexes for residential electric power and liquefied petroleum gas also contributed to lower finished energy goods prices.
Finished core: The index for finished goods less foods and energy moved up 0.3 percent in June, the seventh consecutive monthly advance. Almost half of the June rise can be traced to prices for light motor trucks, which increased 1.6 percent. An advance in the index for plastic products also was a factor in higher finished core prices.
Finished foods: The index for finished consumer foods rose 0.6 percent in June after falling 1.4 percent in the previous month. Accounting for almost sixty percent of this advance, prices for fresh fruits and melons increased 11.8 percent.
The Producer Price Index for intermediate materials, supplies, and components was unchanged in June following ten straight monthly increases. Price advances of 0.3 percent for intermediate goods less foods and energy and 0.4 percent for intermediate foods and feeds offset a 0.8- percent decline in the index for intermediate energy goods. On a 12-month basis, prices for intermediate goods climbed 11.0 percent, the largest increase since a 15.3-percent rise in September 2008.
Intermediate energy: Prices for intermediate energy goods fell 0.8 percent in June, the first decline since July 2010. A major factor in the June decrease was the index for electric power, which fell 2.2 percent. Lower gasoline prices also contributed significantly to the decline in the intermediate energy goods index.
Intermediate core: Prices for intermediate goods less foods and energy moved up 0.3 percent in June, the eleventh consecutive monthly advance. About two-thirds of the June increase can be traced to the index for basic organic chemicals, which rose 2.4 percent. Higher prices for plastic products and for agricultural chemicals and chemical products also contributed to the advance in intermediate core prices.
Intermediate foods: The index for intermediate foods and feeds turned up 0.4 percent in June following a 0.4-percent decline in May. Nearly three-quarters of this rise can be traced to prices for natural cheese (except cottage cheese), which climbed 6.0 percent. Higher prices for soybean cake and meal also were a factor in the advance in the intermediate foods index.
The Producer Price Index for crude materials for further processing fell 0.6 percent in June. For the 3 months ended in June, prices for crude materials declined 0.9 percent after rising 5.6 percent for the 3 months ended in March. In June, the monthly decrease in the crude goods index is attributable to prices for crude energy materials, which moved down 4.1 percent. By contrast, the indexes for crude foodstuffs and feedstuffs and for crude nonfood materials less energy increased 2.1 percent and 1.1 percent, respectively.
Crude energy: The index for crude energy materials declined 4.1 percent in June. From March to June, prices for crude energy materials fell 4.8 percent following a 0.9-percent advance from December to March. The monthly decrease in June was the result of an 8.0-percent drop in the crude petroleum index.
Crude core: The index for crude nonfood materials less energy moved up 1.1 percent in June. From March to June, crude core prices advanced 2.8 percent following a 4.2-percent rise in the prior 3-month period. More than half of the monthly increase in June can be traced to the index for carbon steel scrap, which climbed 2.5 percent. Higher prices for corn also were a significant factor in the advance in the crude core index.
Crude foods: Prices for crude foodstuffs and feedstuffs moved up 2.1 percent in June. For the 3 months ended in June, the increase in the index for crude foodstuffs and feedstuffs slowed to 1.5 percent after climbing 11.7 percent in the prior 3-month period. In June, about half of the monthly advance is attributable to a 19.6-percent jump in the fresh and dry vegetables index. Higher prices for fluid milk also were a major contributor to the rise in the crude foods index.
Services Analysis Trade Industries
Trade industries: The Producer Price Index for the net output of total trade industries was unchanged in June following four consecutive increases. (Trade indexes measure changes in margins received by wholesalers and retailers.) In June, higher margins received by merchant wholesalers of durable goods and by food and beverage stores were offset by lower margins received by family clothing stores and merchant wholesalers of nondurable goods.
Transportation and warehousing industries: The Producer Price Index for the net output of transportation and warehousing industries moved up 0.4 percent in June, the ninth straight advance. One-quarter of the June increase can be traced to the index for couriers, which rose 1.0 percent. Higher prices received by line-haul railroads and by the long-distance general freight trucking industry group also contributed to the advance in the transportation and warehousing industries index.
Traditional service industries: The Producer Price Index for the net output of total traditional service industries rose 0.5 percent in June after moving down 0.2 percent in May. Accounting for about seventy percent of this advance, prices received by the depository credit intermediation industry group moved up 3.7 percent. Higher prices received by the industries for passenger car rental and for investment banking and securities dealing also were factors in the advance in the total traditional service industries index.