January 15, 2009
US PPI Falls in December - 5th Straight Monthly Decline
US PPI fell by 1.9% in December the Bureau of Labor Statistics confirmed today. Economists had been expecting a 2.0% drop following November’s 2.2% decline.
Although today’s US PPI number was mildly better than expected it still represents the fifth straight month of declines in wholesale inflation. Furthermore, the YoY index now shows a decline of 0.9%, the lowest reading since October 2006. The yearly Producer Price Index has deteriorated from a high of 9.9% in a few short months since July 08.
The decline seen in December can mostly be attributed to a 9.3% drop in Energy prices and a 1.5% fall in Foods. Energy prices have fallen at the wholesale level for 5 months in a row, posting an 11.2% drop in November.
On closer inspection, the decline in Energy is due to a 25.7% fall in gas prices (tying the record set in November of this year), a 24.1% fall in home heating oil (largest drop since April 2003), and declines of 21.8 and 17.5 percent in liquefied petroleum gas and diesel fuel respectively.
Inflation in foods has been mixed of late, with only 2 of the last 5 months in negative territory. However, the 1.5 percent fall seen today would suggest acceleration towards the negative after a flat November and a slight 0.2% decline in October.
US Core PPI (excluding food and energy) increased by 0.2% in the month of December. This is slightly higher than the 0.1% that had been expected by economists and higher than the 0.1% seen in November.
Core Producer Prices now stand at 4.3% on a yearly basis, the highest seen since October’s 4.4%.
Filed under Economic Indicators, United States by admin
