By Utta Von Nuremburg
WASHINGTON (MNI) – Thursday morning’s August Producer Price Index
report is expected to be boosted by energy, showing a 0.3% increase
after four declines in the previous six months.
A survey of economists by Market News International centered on a
rise of 0.3% in the headline figure, following a 0.2% increase in July
preceded by three consecutive monthly declines.
According to Ken Mayland, president of ClearView Economics, “the
data for August should be in line with recent industry trends. At the
moment, the inflation climate appears to be fairly tranquil.”
The rise in July’s headline figure was largely driven by finished
food prices which rose 0.7%, reversing three consecutive monthly
declines. However, the July core rate’s 0.3% increase — 0.1% was
expected — was driven by light truck prices. Their acceleration, in
turn, was largely a statistical fluke caused by seasonal adjustment
factors overcompensating for discounting in past years which didn’t
happen this year because of tighter inventories, according to senior BLS
analyst Scott Sager quoted by MNI.
According to July’s PPI release, 60% of the increase in the
broadest measure of finished goods prices was attributed to an increase
in prices of fresh and dry vegetables (9.8%) and higher prices for eggs
for fresh use (19.4%). For July, energy prices offset the headline gain
by falling 0.9%, led by a 2.2% drop in gasoline prices.
Rick MacDonald, director of investment research and analysis at
Action Economics, says “driving the headline number this month will be
the swing in energy prices. There was a surprise gain in the core figure
last month related mostly to vehicles and we expect August to follow a
similar trend.”
Stripping out the volatility in the food and energy sectors, core
PPI is expected to rise 0.1%, following a 0.3% gain and nine consecutive
monthly increases.
— Utta Von Nuremburg is a report with Need to Know News in Washington
** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: MAUDS$, M$U$$$]
