Producer Pricing Pressures Ease in June

By July 14, 2011Economy

The Bureau of Labor Statistics reported this morning that the Producer Price Index (PPI) fell 0.4 percent in June, a welcome relief since businesses have complained about significantly higher energy and raw material prices over much of the past few months. The PPI had risen 0.8 and 0.2 percent, in April and May, but more importantly, producer prices are up 7.0 percent over the past year.

For the month, the producer prices for finished foods were up 0.6 percent, while energy costs were down 2.8 percent. Core inflation, which excludes food and energy, was up 0.3 percent for the month. The cost of intermediate goods was unchanged; whereas, crude material prices fell 0.6 percent.

The cost of manufactured finished goods was also down 0.4 percent for the month, but up 9.3 percent year-over-year. The largest declines were seen in petroleum and coal products (down 3.1 percent) and primary metal manufacturing (down 1.3 percent), with the biggest monthly increases in plastics and rubber products (up 1.4 percent), apparel products (up 0.9 percent), and textile mills manufacturing (up 0.8 percent).

In summary, pricing pressures are still present, particularly for food and feed products, and still weighing on manufacturers as they continue to recover.

Chad Moutray is chief economist, National Association of Manufacturers.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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