The Bureau of Labor Statistics reported that producer prices were unchanged in August. Core inflation, which excludes food and energy costs, rose 0.1 percent. Behind these numbers, it is clear that food and energy price changes are mixed.
Food costs rose 1.1 percent in August or 8.4 percent since last year. This contrasts with energy costs, which were down 1 percent for the month, led by decreases in gasoline and diesel fuels. Still, even with the recent declines in energy costs, energy prices are up 15.9 percent since last year.
For manufacturers, producer prices fell 0.5 percent, mainly from a decline in energy costs. The price of finished prices from petroleum and coal products manufacturing fell 4 percent, for instance, which was more than any other industry. Other decliners included primary metals (down 0.4 percent), plastics and rubber (down 0.3 percent) and chemicals (down 0.2 percent).
With that said, producer prices remain elevated; manufacturing PPI is up 8.7 percent since last year, for instance. For August, industries with the fastest growth in finished goods prices were food manufacturing (up 1 percent), textile mills (up 0.8 percent) and apparel (up 0.7 percent).
The price of intermediate goods also fell 0.5 percent, mainly from lower energy costs (down 2.3 percent). Crude prices rose 0.2 percent.
Overall, this report is a welcome respite from pricing pressures that have dominated the concerns of manufacturers throughout this year. Nonetheless, raw material prices remain elevated, with the costs of some materials still rising, including food.
Chad Moutray is chief economist, National Association of Manufacturers.