As the global economic crisis persists, the nation’s producers are getting somewhat of a break, as wholesale prices have scaled back for the fifth straight month. The US producer price index fell another 1.9% in the month of December, after a 2.2% decline in November and a record 2.8% decline in October. Wholesales energy prices, which fell 9.3% for the month, have much to do with the decline. Core PPI, which excludes energy and food prices because of their volatile nature, did increase a bit, gaining 0.2%. Economists had forecast a 2.2% drop in the PPI, and a flat reading for the core.
In the last year, producer prices have decreased 0.9%, breaking its underlying upward trend. But core prices are still in this inflationary trend, as witnessed by its 4.3% gain in the last year, the largest year-over-year increase since 1988. The same applies for capital equipment, whose prices also rose in December, and are up 4.0% in the last year. Any increased demand in our economy and we may be looking at higher prices once more, especially with all the money being pumped into the economy by the Fed.
Report Details (via MarketWatch):
The producer price index declined 1.9%, driven by a massive 9.3% drop in energy prices and helped along by a 1.5% decline for food.
Gasoline prices last month fell 25.7%, matching a record set in November. Prices for home heating oil dropped 24.1% — the largest decrease since April 2003.
Prices for finished consumer foods fell the most since February 2006.
Fresh and dry vegetable prices sank 14.9% last month, the biggest decline since February. Fluid milk products prices fell 5.3%, the most since August 2004.
Inflation pressures also eased further in the production pipeline as 2008 drew to a close.
The PPI for intermediate foods fell 4.2% in December. The intermediate core PPI fell a record 3%.
Over 12 months, the intermediate core rate gained by 3.2%.
Prices for intermediate energy goods fell 9.5% in December, with prices for foods and feeds down 3.4%.
Crude goods prices fell 5.3% in December.
Crude energy materials fell 6%, as petroleum fell a record 31%. Crude food fell 5.3%, and the crude core rate fell 2.2%.
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