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2008 Economic Calendar |
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Resource Center » U.S. & Intl Recaps | Release Dates | Why Investors Care | Today's Calendar
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The Producer Price Index (PPI) is a measure of the average price level for a fixed basket of capital and consumer goods received by producers. Why Investors Care
| Released on 8/14/07 For Jul 2007 | |||||||||||||||||||||||||
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Highlights
Overall producer prices jumped in July due higher energy costs but the core eased. The overall PPI increased 0.6 percent in July, following a 0.2 percent dip in June. July's figure was well above the market forecast for a 0.1 percent rise. The core rate eased to 0.1 percent in July, following a 0.3 percent rise in June. The July core rate was just below the consensus forecast for a 0.2 percent rise in the core rate. Within the core, consumer goods excluding food and energy rose 0.2 percent in July while capital goods edged up 0.1 percent.
The year-on-year rate for the overall PPI jumped to up 3.9 percent in July (seasonally adjusted) from up 3.2 percent in June. The year-on-year core rate stood at 2.4 percent in July, up from 1.8 percent in June.
For the overall PPI, strength was in energy. By special groupings, energy rebounded 2.5, following a 1.1 decline in June. July's jump in energy was led by gasoline, up 3.2 percent, following a 3.9 percent drop in June. Home heating oil slipped 0.1 percent in June, following a 0.5 percent decline in June. Residential gas increased 2.7 percent in July, following a 2.6 percent boost the month before. Consumer food prices slipped another 0.1 percent in July, following a 0.8 percent drop in June.
Overall prices at the crude level of production also felt the heat from higher oil prices and posted a 1.2 percent boost in July, following a 0.3 percent rise in June. Excluding food and energy, crude prices were unchanged after a 0.2 percent dip in June. Prices at the intermediate level increased 0.6 percent in July, following a 0.5 percent boost in June. Excluding food and energy, intermediate prices rose 0.2 percent, following a 0.4 percent gain the prior month.
Today's report continues to show the importance of energy in overall inflation - something the Fed clearly is watching. The core is moderate but energy is still exerting upward pressure on overall inflation. The markets are likely to not pay a lot of attention to today's PPI since the core is moderate and we get a CPI reading tomorrow - which is more reliable.
The producer price index fell 0.2 percent in June, following a 0.9 percent jump in May. Meanwhile, the core rate firmed in June to a 0.3 percent increase, following a 0.2 percent rise in May. Given the recent spike in oil prices, we are likely to see a jump in overall producer prices in June but the core is likely to be moderate.
PPI Consensus Forecast for July 07: +0.1 percent
Range: -0.3 to +0.7 percent
PPI ex food & energy Consensus Forecast for July 07: +0.2 percent
Range: 0.0 to +0.2 percent
![[Chart]](chart.gif)
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It is always a good idea to look at more than a few months of data to get a sense of changes in established trends. Monthly changes in the PPI are mainly volatile because of sharp fluctuations in food and energy prices. The core PPI eliminates the sharper fluctuations. |
![[Chart]](chart_1.gif)
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Yearly changes tend to smooth out more severe monthly fluctuations and give a better idea of the underlying rate of inflation. Even with the smoother trend, note that the core PPI does not fluctuate as much as the total PPI. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
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