The Producer Price Index for finished goods increased 0.2% in May 2011. The PPI measures prices obtained for U.S. goods. Intermediate goods prices increased 0.9% and crude or raw materials prices dropped -4.1%. PPI is often called wholesale inflation by the press. This worries Wall Street:
On an unadjusted basis, prices for finished goods moved up 7.3% for the 12 months ended May 2011, the largest year-over-year gain since an 8.8% advance in September 2008.
Below is the wholesale finished goods PPI percent change for the year.
But should it worry main street? The monthly change says maybe not. In finished goods, food and energy negated each other. Foods dropped -1.4% and energy increased 1.5% for May. Gas was 75% of the PPI finished goods increase and jumped yet another 2.7% for May. From one year ago gas has increased a whopping 49.7%. Heating oil has also jumped 39.7%.
Food, on the other hand, dropped -1.4%, and had it's largest decrease since July 2010. These are wholesale prices, so demanding $9 bucks for 10 ounces of some frozen food item heavily advertised on TV will probably remain high, unfortunately marketing costs, are not part of this index. Fruits and vegetables dropped -11.1% and -12.2% respectively, so Michelle Obama should be happy.
Core PPI or finished goods minus food and energy, increased 0.2% for May 2011. The report cites cheap plastic was the cause, a monthly increase of 1.2%, was not so cheap this month.
Below is the monthly percentage change of finished energy only, to show the increase in prices.
Crude in the Producer Price Index means the items which are used for further processing, or to make other stuff dropped -4.1% in May 2011, yet for the last three month's crude wholesale prices are down -0.8%. Crude petroleum dropped -10.9% and poor piggies to the slaughter declined -15.2%.
In May, about half of the broad-based monthly decline can be attributed to a 5.2-percent drop in the index for crude energy materials. Also contributing to the May decrease, prices for crude foodstuffs and feedstuffs fell 4.4 percent and the index for crude nonfood materials less energy moved down 0.9 percent.
Crude core or crude stuff minus food and energy, decreased -0.9% for May, seems copper scrap metal prices dropped -4.7%.
For intermediate wholesale goods we had a 0.9% increase for May and 75% of this increase was intermediate core goods or goods minus food and energy. Chemical industrial supplies was 50% of the core intermediate goods increase, which jumped 4.1% for May.
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.