2011 Economic Calendar
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Producer Price Index
Released On 8/17/2011 8:30:00 AM For Jul, 2011
PriorConsensusConsensus RangeActual
PPI - M/M change-0.4 %0.0 %-0.6 % to 0.6 %0.2 %
PPI -Yr/Yr change7.2 %
PPI less food & energy - M/M change0.3 %0.2 %0.1 % to 0.3 %0.4 %
PPI less food & energy - Yr/Yr change2.5 %

Highlights
Producer price inflation surprised on the high side despite a softening in energy costs. The culprits included food, motor vehicles, and tobacco. Producer prices in July rebounded 0.2 percent, following a 0.4 percent drop the month before. The July pace came in higher than the market median estimate for no change. By major components, energy dipped 0.6 percent after a 2.8 percent fall in June. Gasoline declined 2.8 percent after dropping 4.7 percent the month before. In contrast, food costs jumped another 0.6 percent, following a rebound of 0.6 the previous month.

At the core level, PPI inflation accelerated to a 0.4 percent rise after jumping 0.3 percent in June. Analysts had forecast a rise of 0.2 percent. Strong gains were seen in tobacco products, light trucks, and pharmaceutical preparations. Nearly one-quarter of the July advance can be attributed to a 2.8 percent increase in prices for tobacco products. Light truck prices jumped 1.0 percent in the latest period while pharmaceutical preparations surged 3.2 percent. Passenger car prices rose but a more moderate 0.2 percent. Still, shortages of motor vehicle models dependent on parts from Japan continued to put upward pressure on prices.

For the overall PPI, the year-ago pace in July posted at 7.2 percent, compared to 7.0 percent in June (seasonally adjusted). The core rate in July rose to 2.5 percent from 2.3 percent the month before (seasonally adjusted). On a not seasonally adjusted basis for July, the year-ago headline PPI was up 7.2 percent while the core was up 2.5 percent.

Overall, inflation has picked up due largely to food costs and despite softer energy costs. The core rate is up significantly but likely due to temporary factors.

Recent History Of This Indicator
The producer price index in June turned negative with prices dropping 0.4 percent, following a relatively soft rise of 0.2 percent in May. By major components, energy fell a sizeable 2.8 percent after rising 1.5 percent in May. Gasoline dropped 4.7 percent after rising 2.7 percent the prior month. Food costs rebounded 0.6, following a 1.4 percent dip the prior month. At the core level, PPI inflation bumped up to 0.3 percent from 0.2 percent in May. Almost half of the June rise can be traced to prices for light motor trucks, which increased 1.6 percent, following a 0.6 percent decline. Prices for this subcomponent likely were supported by shortages of models dependent on parts from Japan.

Definition
The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of indexes that measure the average change over time in the prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. Effective with the January 2014 PPI data release in February 2014, BLS transitioned from the Stage of Processing (SOP) to the Final Demand-Intermediate Demand (FD-ID) aggregation system. The headline PPI (for Final Demand) measures price changes for goods, services, and construction sold to final demand: personal consumption, capital investment, government purchases, and exports.  Why Investors Care
 
[Chart]
It is always a good idea to look at more than a few months of data to get a sense of changes in established trends. Monthly changes in the PPI are mainly volatile because of sharp fluctuations in food and energy prices. The core PPI eliminates the sharper fluctuations.
Data Source: Haver Analytics
 
[Chart]
Yearly changes tend to smooth out more severe monthly fluctuations and give a better idea of the underlying rate of inflation. Even with the smoother trend, note that the core PPI does not fluctuate as much as the total PPI.
Data Source: Haver Analytics
 

 

2011 Release Schedule
Released On: 1/132/163/164/145/126/147/148/179/1410/1811/1512/15
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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