PPI shows limited increase in US core inflation
PPI shows limited increase in US core inflation
By Alex Barker in Washington
Copyright The Financial Times Limited 2007
Published: June 14 2007 17:56 | Last updated: June 14 2007 17:56
Rising energy costs pushed US producer prices higher than expected for the fourth month in a row, according to government figures. However, once more volatile energy and food prices are excluded, the overall rise is in line with economists’ forecasts, suggesting its inflationary impact would be limited.
The producer price index rose by 0.9 per cent, following a 0.7 per cent rise in April. Core prices excluding food and energy rose by 0.2 per cent.
The Federal Reserve has been concerned that rising producer and import prices will bleed into the economy and raise prices consumers are paying. So far this year, producer prices are 4.1 per cent higher. However the annual core rate has increased by 1.6 per cent. This smaller rise partly explains why the price pressures from energy have yet to take hold in the wider economy.
Michael Feroli, economist at JP Morgan, said the rise in overall producer prices was higher, but appeared benign at this point. ”The core was pretty firm but generally it looks like there are still some inflationary pressures in the pipeline,” he said.
The producer price index is one of three measures of inflation reported by the government. The consumer price index is released on Friday.
The report showed that energy prices jumped by 4.1 per cent, the biggest rise this year, while food costs fell by 0.2 per cent after vegetable costs saw their biggest decline in about five years.
Raw material prices, or crude goods, rose by 2 per cent after declining by 1.5 per cent in the month before. Intermediate goods, which are used in the early stages of production, rose by 1.1 per cent and 0.4 per cent excluding food and energy.
Meanwhile, a separate report from the Labour department showed that unemployment claims were held steady at 311,000 for the second straight week, suggesting the labour market remained healthy.
By Alex Barker in Washington
Copyright The Financial Times Limited 2007
Published: June 14 2007 17:56 | Last updated: June 14 2007 17:56
Rising energy costs pushed US producer prices higher than expected for the fourth month in a row, according to government figures. However, once more volatile energy and food prices are excluded, the overall rise is in line with economists’ forecasts, suggesting its inflationary impact would be limited.
The producer price index rose by 0.9 per cent, following a 0.7 per cent rise in April. Core prices excluding food and energy rose by 0.2 per cent.
The Federal Reserve has been concerned that rising producer and import prices will bleed into the economy and raise prices consumers are paying. So far this year, producer prices are 4.1 per cent higher. However the annual core rate has increased by 1.6 per cent. This smaller rise partly explains why the price pressures from energy have yet to take hold in the wider economy.
Michael Feroli, economist at JP Morgan, said the rise in overall producer prices was higher, but appeared benign at this point. ”The core was pretty firm but generally it looks like there are still some inflationary pressures in the pipeline,” he said.
The producer price index is one of three measures of inflation reported by the government. The consumer price index is released on Friday.
The report showed that energy prices jumped by 4.1 per cent, the biggest rise this year, while food costs fell by 0.2 per cent after vegetable costs saw their biggest decline in about five years.
Raw material prices, or crude goods, rose by 2 per cent after declining by 1.5 per cent in the month before. Intermediate goods, which are used in the early stages of production, rose by 1.1 per cent and 0.4 per cent excluding food and energy.
Meanwhile, a separate report from the Labour department showed that unemployment claims were held steady at 311,000 for the second straight week, suggesting the labour market remained healthy.
posted by Carlos T Mock at 10:31 AM
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