EmailStory Stocks®
Archive
Last Update: 18-Oct-11 09:19 ET
PPI Spikes in September on Temporary Increase in Energy Costs
Producer prices jumped 0.8% in September after being unchanged in August. The Briefing.com consensus expected the PPI to increase 0.2%.
The spike in producer prices should not be a cause for concern and most likely will turn negative next month.
The average oil and gasoline price in September was substantially lower than August levels. However, the Bureau of Labor Statistics does not use monthly averages to calculate inflation. Instead, it surveys businesses on one day during the month. It just so happened that the day used to compare inflation between September and August was during a mini surge in oil prices where crude prices were 13.7% higher than their respective August level and gasoline prices were up 1.4%.
This spike in energy prices translated into a 2.3% increase in energy costs in the PPI index, the largest increase since the North African/Middle East uprisings pushed oil prices higher during the first quarter of the year.
Since oil and gasoline prices have moderated since the BLS survey date, the energy index should reverse in October and put downward pressure on inflation.
Food prices increased 0.6% in September as fresh and dry vegetable prices were up 10.0%.
Outside of food and energy prices, core prices increased 0.2% in September, up from 0.1% in August. The consensus expected core prices to increase 0.1%.
A 0.6% increase in light truck prices accounted for one-third of the increase in core prices.
The spike in producer prices should not be a cause for concern and most likely will turn negative next month.
The average oil and gasoline price in September was substantially lower than August levels. However, the Bureau of Labor Statistics does not use monthly averages to calculate inflation. Instead, it surveys businesses on one day during the month. It just so happened that the day used to compare inflation between September and August was during a mini surge in oil prices where crude prices were 13.7% higher than their respective August level and gasoline prices were up 1.4%.
This spike in energy prices translated into a 2.3% increase in energy costs in the PPI index, the largest increase since the North African/Middle East uprisings pushed oil prices higher during the first quarter of the year.
Since oil and gasoline prices have moderated since the BLS survey date, the energy index should reverse in October and put downward pressure on inflation.
Food prices increased 0.6% in September as fresh and dry vegetable prices were up 10.0%.
Outside of food and energy prices, core prices increased 0.2% in September, up from 0.1% in August. The consensus expected core prices to increase 0.1%.
A 0.6% increase in light truck prices accounted for one-third of the increase in core prices.
