–YOY Rates are +7.3% Overall PPI and +2.1% Core PPI
By Joseph Plocek
WASHINGTON (MNI) – The latest producer price data suggest energy
price declines are not breaking inflation as expected, or perhaps not as
fast as expected, but there are bright signs in crude prices that could
turn the PPI lower ahead.
May PPI printed +0.2%, and core +0.2% (+0.1696% unrounded) for
+7.3% overall and +2.1% core over the year. This represented a sixth
gain in core, averaging 0.3 point per month. Core had been averaging
+0.1 point in the prior six months.
In core, cars posted +0.5% but light trucks offset at -0.6%,
apparel printed +1.0% (the biggest gain since April 1981 and after a dip
in April), plastics +1.2%, and paper +0.7%.
Food printed -1.4% in its largest drop since -2.4% in June 2010,
on the back of drops in fruit, vegetables and meats. The harvest surge
helped lower these prices. Unadjusted food prices were as much as 3%
to 17% lower in spots (for beef and eggs, respectively).
Energy printed +1.5% in an eighth consecutive gain as home heating
oil posted -3.5% but there were rises in electricity, lubrications, and
gas (+2.7%, accounting for 3/4 of the May jump in energy).
The cost of moving these goods to market also rose as transport
services and postal costs moved up in services.
Intermediate PPI posted +0.9% but crude -4.1% on the back of lower
energy and foodstuffs. The three-month growth rate for crude is -0.8%,
suggesting inflation moderation.
Overall, this report was about as expected. Core is now at its
worst pace since +2.3% over the year in August 2009.
**Market News International Washington Bureau: (202)371-2121**
[TOPICS: MAUDS$,M$U$$$,MT$$$$,MAUDR$]
