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Last Update: 15-Nov-11 09:36 ET
Lower Energy Costs Lead to a Decline in the October PPI
Producer prices fell 0.3% in October after increasing 0.8% in September. That is the first decline since June, when prices fell by the same amount. The Briefing.com consensus expected the PPI to decline 0.2%.
As expected, the energy sector was the reason for the decline.
The energy sector suffered from timing issues in September rather than real price movements. Instead of taking an average price level for the month, the BLS surveys consumers and producers during only one week. Temporary price spikes then can have a profound impact on inflation levels.
Even though average oil prices in September were lower than in August, it just so happened that the week of the survey came during a mini-surge in prices. Oil prices reverted to lower levels within a few days.
This caused a 1.4% decline in energy prices in October after increasing 2.3% in September.
Food prices were up a modest 0.1%, the smallest increase since May.
Excluding food and energy prices, core PPI growth was flat in October after increasing 0.2% in September. The consensus expected core prices to increase 0.1%.
Higher costs for pharmaceutical goods and civilian aircraft offset a decline in motor vehicle prices.
As expected, the energy sector was the reason for the decline.
The energy sector suffered from timing issues in September rather than real price movements. Instead of taking an average price level for the month, the BLS surveys consumers and producers during only one week. Temporary price spikes then can have a profound impact on inflation levels.
Even though average oil prices in September were lower than in August, it just so happened that the week of the survey came during a mini-surge in prices. Oil prices reverted to lower levels within a few days.
This caused a 1.4% decline in energy prices in October after increasing 2.3% in September.
Food prices were up a modest 0.1%, the smallest increase since May.
Excluding food and energy prices, core PPI growth was flat in October after increasing 0.2% in September. The consensus expected core prices to increase 0.1%.
Higher costs for pharmaceutical goods and civilian aircraft offset a decline in motor vehicle prices.
