Core PPI Up 0.4% for July 2011

The Producer Price Index, or wholesale inflation, increased 0.2% in July 2011 for finished goods. Core PPI, which is finished goods minus food and energy, jumped 0.4% and is the 8th month in a row for an increase. Smokers beware, 25% of core's 0.4% jump was tobacco products. Core PPI is a Federal Reserve watch number for signs of future inflation. Intermediate goods prices increased 0.2% and crude or raw materials prices dropped -1.2%.

Unadjusted, finished goods have increased 7.2% for the last 12 months, which will probably worry the Fed. In September 2008, finished goods had an 8.8% year-over-year gain, May 2011, finished goods yearly gain was 7.3%. Below is the wholesale finished goods PPI percent change for the year.



Should PPI worry main street? The monthly change says maybe not. In finished goods, food and energy negated each other. Foods increased +0.6% and energy decreased -0.6% for July. Tobacco products increased 2.8% in a month. Gas dropped -2.8%. From one year ago gas has increased a whopping 41.7% and Heating oil has also increased 45.8% for the year.

Food, seems to have increased across the board, with dairy, meats increasing greater than 2%, with the exception of chickens. Vegetables dropped -18.1%, but getting that coffee at the grocery is looking bad, wholesale prices increased 2.2%.



Below are Core PPI or finished goods minus food and energy, which increased 0.4% for July 2011. Capital equipment, or finished goods to make more goods, increased +0.4%.



Below is the monthly percentage change of finished energy only, to show the decrease in prices.



Crude in the Producer Price Index are the items which are used for further processing, or to make other stuff. Crude PPI dropped -1.2% in July 2011 and -5.8% for the last three months. Crude energy dropped -2.6% in July and is down -11.5% for the last three months.

Crude core or crude stuff minus food and energy, increased +0.7% for July, with copper jumping +7.0%. This might be an example of speculative commodity bubbles affecting main street.

For intermediate wholesale goods we had a 0.2% increase for July and price increases across the board.

Below is the indexed price change for all commodities. Commodities are not limited to what comes from inside the United States.



Here is the BLS website for more details on the Producer Price Index. They list individual items and special indexes. For example, industrial electrical power increased 7.7% in one month.

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