Producer Price Index for Finished Goods rose 1.1% in December

RP news wires

The Producer Price Index for Finished Goods rose 1.1 percent in December, seasonally adjusted, the U.S. Department of Labor’s Bureau of Labor Statistics reported on January 13. This advance followed increases of 0.8 percent in November and 0.4 percent in October and marks the sixth straight rise in finished goods prices. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 1.0 percent, and the crude goods index increased 4.0 percent. On an unadjusted basis, prices for finished goods advanced 4.0 percent in 2010 after climbing 4.3 percent in 2009.

Stage-of-Processing Analysis

Finished goods
About three-fourths of the December rise in the finished goods index can be traced to prices for energy goods, which increased 3.7 percent. Also contributing to the broad-based advance in the finished goods index, prices for consumer foods and for goods other than foods and energy moved up 0.8 percent and 0.2 percent, respectively.

Finished energy: The index for finished energy goods climbed 3.7 percent in December, its third consecutive monthly advance. Roughly 60 percent of the December rise is attributable to a 6.4-percent jump in gasoline prices. Increases in the indexes for home heating oil and liquefied petroleum gas also contributed to higher prices for finished energy goods.

Finished foods: The index for finished consumer foods rose 0.8 percent in December after moving up 1.0 percent in November. More than three-fourths of the December advance can be linked to prices for fresh and dry vegetables, which surged 22.8 percent. Higher prices for meats also were a major factor in the increase in the finished consumer foods index.

Finished core: The index for finished goods less foods and energy moved up 0.2 percent in December following a 0.3-percent rise in November. Nearly sixty percent of the December increase can be traced to a 2.9-percent advance in cigarette prices.

Intermediate goods
The Producer Price Index for Intermediate Materials, Supplies and Components moved up 1.0 percent in December, its fifth consecutive monthly advance. Accounting for about two-thirds of the broad-based December increase, prices for intermediate energy goods rose 3.1 percent. The indexes for both intermediate materials less foods and energy and for intermediate foods and feeds also contributed to this advance, rising 0.4 percent and 0.6 percent, respectively. In 2010, prices for intermediate goods climbed 6.5 percent after increasing 2.9 percent in 2009.

Intermediate energy: The intermediate energy goods index increased 3.1 percent in December, its third consecutive advance of about 3 percent. Contributing significantly to the December rise, prices for diesel fuel jumped 8.6 percent. Increases in the indexes for gasoline and lubricating oil base stocks also were major factors in the advance in prices for intermediate energy goods.

Intermediate core: The index for intermediate materials less foods and energy moved up 0.4 percent in December, its fifth consecutive monthly increase. About 45 percent of the December advance can be attributed to a 4.9-percent rise in prices for primary basic organic chemicals. The index for non-ferrous wire and cable also moved up, contributing to the increase in intermediate core prices.

Intermediate foods: Prices for intermediate foods and feeds rose 0.6 percent in December, their fifth consecutive monthly advance. Leading the December increase, the prepared animal feeds index moved up 2.9 percent.

Crude goods
The Producer Price Index for Crude Materials for Further Processing increased 4.0 percent in December. For the three months ended in December, crude goods prices advanced 9.0 percent following a 4.6-percent rise for the three months ended in September. Accounting for about 70 percent of the December monthly increase, the index for crude energy materials climbed 7.7 percent. Also contributing to this broad-based advance, prices for crude non-food materials less energy and for crude foodstuffs and feedstuffs moved up 3.1 percent and 1.1 percent, respectively.

Crude energy: The index for crude energy materials jumped 7.7 percent in December. From September to December, crude energy prices advanced 12.0 percent after falling 4.2 percent for the three months ended in September. Almost ninety percent of the December monthly rise was the result of a 23.4-percent surge in the index for natural gas. Higher prices for crude petroleum and coal also were factors in the advance in the crude energy materials index.

Crude core: Prices for crude non-food materials less energy moved up 3.1 percent in December. For the three-month period ended in December the crude core index rose 8.6 percent, subsequent to a 7.6-percent increase from June to September. Accounting for over 60 percent of the December monthly advance, carbon steel scrap prices climbed 8.9 percent. An increase in the index for grains also contributed to higher crude core prices.

Crude foods: The index for crude foodstuffs and feedstuffs rose 1.1 percent in December. From September to December, crude foods prices moved up 6.1 percent after advancing 12.5 percent during the previous three months. Leading the December monthly increase, the index for slaughter livestock climbed 4.3 percent.

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