–YOY Rates Remain Modest at +3.6% Overall and +1.6% Core
By Joseph Plocek
WASHINGTON (MNI) – The U.S. January producer price data were worse
than expectations, raising the question of whether start-of-the-year
price hikes across a broad range of categories indicate rising inflation
in the new year.
For now, the best answer is that general price gains will probably
be far lower than the January PPI, since over the year PPI gains remain
modest and are unlikely to jump-start the more important CPI, and
because price hikes far down the pipeline often reverse as a year
unfolds.
January PPI printed +0.8% in a seventh gain in a row, and core
printed +0.5% in its worst showing since +0.8% in October 2008. Core
was +0.5155% unrounded. Over-the-year rates were +3.6% overall and +1.6%
in core.
Within core, nonwood furniture +5.6%, pharmaceuticals +1.4%,
alcoholic beverages +1.0%, plastics +0.6%, jewelry +2.1%, tires +1.7%,
sanitary paper +1.9%, and menswear +0.5% contributed to the gain. Many
of these appear to be start-of-the-year tests of whether higher list
prices will hold.
In addition, a Bureau of Labor Statistics analyst said some drugs
have recurring start-of-year gains that are badly adjusted. Unadjusted
pharmaceutical prices were +5.4%.
Food printed +0.3% as butter, beef-veal, soft drink and vegetable
prices surged.
Energy posted +1.8% as jumps in gasoline and fuel oil were offset
by drops in natural gas and electric prices. In another instance where
seasonal adjustment might be in question, residential electric power
prices also fell 1.3% in January 2010.
Intermediate PPI was +1.1% and crude +3.3%, showing there are still
pipeline pressures. In addition to energy, metals and feeds rose in
price.
These data indicate the economy is mending, as are exports, and are
not necessarily a harbinger of massively surging prices. But they are
not a good start to the year.
**Market News International Washington Bureau: (202) 371-2121**
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