–July PPI Up 0.5% Year/Year, Smallest Since -2.0% In October 2009
–July Core PPI Up 2.5% Year/Year, Down From 2.6% In June
–Food Prices Up 0.5% In July Lifted By Beef, Veal; Corn Prices Surge
–Energy Prices Fall 0.4%, Gasoline Down, Electricity Up

By Kevin Kastner

WASHINGTON (MNI) – The Producer Price Index rose 0.3% in July,
above expectations for a 0.2% rise, as food prices rose 0.5% and the
core PPI rose 0.4%, offsetting a 0.4% decline in energy prices, data
released Tuesday by the Bureau of Labor Statistics showed.

Despite the larger-than-expected increase in the overall PPI, the
largest since February, the year/year rise for that measure slowed
further to 0.5%, the slowest 12-month rate since a 2.0% decline in
October 2009.

The core PPI price rise was the fastest since January, but the
year/year rate slowed to 2.5% in July, down from 2.6% in June and the
slowest annual rise since 2.3% in June 2011.

The 0.5% rise in food prices in July was the result of increases in
a number of categories. The BLS said that “over half of the July
increase can be traced to prices for beef and veal,” which posted a 3.8%
increase in the month.

In addition, corn prices rose 34.5% in the month, the largest rise
since October 2006 and perhaps the result of the ongoing drought in
growing regions.

Energy price tumbled for the fifth straight month, with a 3.1%
decline in gasoline prices accounting for most of the decline according
to the BLS.

In addition, there was a decline in the price of heating oil, with
and offsetting gain in the price of electric power.

Within the core, prices of passenger cars rose 1.1%, the largest
gain since a 1.5% rise in June 2009. Light truck prices rose 1.6% in
July, the largest gain since a 2.2% rise in November 2009. Tobacco
products prices rose 1.8% in the month.

In the inflation pipeline, intermediate goods prices were down
0.9%, both including and excluding food and energy prices. Crude prices,
however, were up 1.8% in July, but were down 1.1% excluding food and
energy prices.

** MNI Washington Bureau: 202-371-2121 **

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