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Last Update: 18-Jan-12 09:56 ET
PPI Declines on Weaker Food and Energy Prices
Producer prices declined for the second time in three months as the PPI index fell 0.1% in December. Prices had increased 0.3% in November. The Briefing.com consensus expected the PPI to increase 0.1%.
As expected, both energy and food prices negatively impacted prices in December.
Energy prices fell 0.8% in December as gasoline prices declined 2.3% and residential gas prices fell 2.8%.
Fresh and dry vegetables -- which increased 11.5% in November and were instrumental in pushing the food index up 1.0% -- nearly gave back all of that gain in December, falling 11.1%. That caused the food index to ecline 0.8% in December.
Excluding food and energy, core producer prices increased 0.3%. That was the largest increase since July and well above the consensus expectation of 0.1% growth.
The gain, however, came primarily from a spike in light motor truck prices. These prices increased 0.9% in December and contributed approximately 0.1 percentage points of the 0.3 percentage point increase in core PPI. Motor vehicle price gains are generally not sustainable. We expect prices to moderate in the coming months.
None of the other components of the core PPI showed notable or unexpected growth.
Pricing pressures down the manufacturing pipeline remain weak. Core intermediate prices fell 0.5%, the third consecutive monthly decline. Core crude prices were flat after falling 4.3% and 2.5% in October and November.
As expected, both energy and food prices negatively impacted prices in December.
Energy prices fell 0.8% in December as gasoline prices declined 2.3% and residential gas prices fell 2.8%.
Fresh and dry vegetables -- which increased 11.5% in November and were instrumental in pushing the food index up 1.0% -- nearly gave back all of that gain in December, falling 11.1%. That caused the food index to ecline 0.8% in December.
Excluding food and energy, core producer prices increased 0.3%. That was the largest increase since July and well above the consensus expectation of 0.1% growth.
The gain, however, came primarily from a spike in light motor truck prices. These prices increased 0.9% in December and contributed approximately 0.1 percentage points of the 0.3 percentage point increase in core PPI. Motor vehicle price gains are generally not sustainable. We expect prices to moderate in the coming months.
None of the other components of the core PPI showed notable or unexpected growth.
Pricing pressures down the manufacturing pipeline remain weak. Core intermediate prices fell 0.5%, the third consecutive monthly decline. Core crude prices were flat after falling 4.3% and 2.5% in October and November.
