The Bureau of Labor Statistics reported that the producer price index (PPI) rose 0.2 percent in July, reversing the 0.4 percent decline in June. Higher prices for food items were offset by lower energy costs. Excluding food and energy, the core PPI was up 0.4 percent for the month, or 2.5 percent since last year.
Core inflation has continued creeping higher each month this year, but still remains modest. The cost of intermediate goods rose 0.2 percent, while the cost of crude materials fell 1.2 percent.
For manufacturers, the cost of manufactured goods rose 0.3 percent for July and 9.7 percent year-over-year. Over the course of the past year, those industries with the largest gains in producer prices include petroleum and coal products (up 41.8 percent), fabricated metal products (up 13.8 percent), textile mills (up 13.8 percent), beverage and tobacco manufacturing (up 10.6 percent), food products (up 9.7 percent) and chemicals (up 9.3 percent). With the exception of petroleum, many of these same industries experienced the fastest monthly gains.
The good news in these numbers is while raw material prices remain elevated, the pace of growth has slowed considerably from previous months. The slowdown in pricing pressures at the intermediate and crude level, for instance, should be welcome relief to manufacturers who have cited these rising costs as major worries in past months.
Chad Moutray is chief economist, National Association of Manufacturers.