–YOY PPI +5.3%, YOY Core PPI +1.3%; Energy, Food Fall
By Joseph Plocek
WASHINGTON (MNI) – The U.S. May PPI report was benign, as overall
PPI printed -0.3% and core +0.2% (+0.2308% unrounded) in its seventh
gain.
These represented over-the-year rates of +5.3% overall and +1.3%
core, but the monthly changes were slightly higher than expected.
Energy was down 1.5% as all areas fell. Home heating oil at -7.4%
and gasoline at -7.0% led the decline.
Food printed -0.6% as vegetable prices fell 18% and chickens,
cheese, and non-frozen prepared foods also fell. This was the biggest
drop in vegetable prices since -20.9% in May 2009, a year ago. A Bureau
of Labor Statistics economist suggested that the winter freeze had
lifted produce prices and these price hikes were fading in spring.
In core, cigarettes posted +2.5%, floor coverings +2%, light trucks
+0.8% after two months of decline (represents about 40% of the core
gain), and aircraft +0.4%. These all boosted the total.
So the bottom line is that the bigger-than-expected core advance
appears due to a few factors that should not repeat.
Intermediate PPI printed +0.4% in a broad advance, but Crude was
off 2.8% as energy, food, paper and metals fell. Crude is down in three
of the last four months, suggesting that there are no big price
pressures coming down the pike.
The more important May CPI data are due Thursday.
**Market News International Washington Bureau: (202) 371-2121**
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