–Unrounded Core +0.01653%; YOY core +2.7%, Low Since Summer 2011

By Joseph Plocek

WASHINGTON (MNI) – The April producer price data were slightly
better than expected.

April PPI printed -0.2% against an expectation of unchanged, and
core was an as-expected +0.2% (0.01653% unrounded). These represented
+1.9% over-the-year overall (in a seventh month of slowing and the
slowest pace since October 2009) and +2.7% over-the-year core.

Foods printed +0.2% as eggs, beef, and fruit jumped but pork,
dairy, baked goods and coffee fell.

Energy printed -1.4% as gas posted -1.7% and residential natural
gas -3.1% (its best since -3.7% in January). These lowered the overall
index to less than expected. Unadjusted energy prices were +0.9%, so the
severe seasonal adjustment was a big contributer to the decline.

In core, plastics posted +0.6%, pharmaceuticals +0.4% (represents
about 1/4 the core gain), civilian aircraft +0.3%, and alcoholic
beverages +0.3%. They all contributed to keeping core higher; these were
moderated by drops in jewelry, tools, appliances, and cleaning products

Intermediate PPI was -0.5%, mainly due to energy; chemical prices
rose, accounting for 80% of the residual gain. Crude posted -4.4% and
crude core prices fell due to lower metals scrap prices.

Overall this is a good report that shows slow inflation holding
only pockets of problem areas such as pharmaceuticals. With gasoline
prices still declining, it is possible the May price reports could
improve further.

**Market News International Washington Bureau: (202)371-2121**