PRODUCER PRICE INDEXES – APRIL 2010

The Producer Price Index for Finished Goods declined 0.1 percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This decrease followed a 0.7 percent advance in March and a 0.6 percent decrease in February. At the earlier stages of processing, prices received by producers of intermediate goods moved up 0.8 percent and the crude goods index fell 1.2 percent. On an unadjusted basis, prices for finished goods advanced 5.5 percent for the 12 months ended April 2010, their sixth consecutive 12-month increase.

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Stage-of-Processing Analysis

Finished goods

In April, the decline in the index for finished goods can be attributed to lower prices for energy goods, which fell 0.8 percent. Also contributing to lower finished goods prices, the index for finished consumer foods moved down 0.2 percent. By contrast, prices for finished goods less foods and energy rose 0.2 percent.

Finished energy: Prices for finished energy goods decreased 0.8 percent after rising 0.7 percent in the previous month. Leading this decline, the gasoline index fell 2.7 percent. Lower prices for liquefied petroleum gas and residential natural gas also were factors in the finished energy goods decrease.

Finished foods: Prices for finished consumer foods fell 0.2 percent in April, their first decline since July 2009. Leading the April decrease, the index for fresh and dry vegetables dropped 10.2 percent.

Lower prices for eggs for fresh use also contributed to the finished consumer foods decline.
Finished core: The index for finished goods less foods and energy advanced 0.2 percent in April, its
sixth consecutive monthly increase. Accounting for about one-fifth of the April advance, passenger car prices rose 0.6 percent.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components moved up 0.8 percent
in April, its seventh straight monthly advance. Accounting for most of the broad-based April increase, prices for intermediate materials less foods and energy climbed 1.1 percent. The indexes for both intermediate foods and feeds and for intermediate energy goods also contributed to this advance, rising 0.5 and 0.1 percent, respectively. On a 12-month basis, prices for intermediate goods moved up 8.6 percent, their largest increase since a 9.8-percent rise in October 2008.

Intermediate core: The index for intermediate materials less foods and energy climbed 1.1 percent, its largest increase since a 2.0-percent rise in July 2008. Thirty percent of the April advance can be attributed to higher prices for plastic resins and materials, which surged 11.4 percent. The indexes for steel mill products and primary basic organic chemicals also contributed significantly to higher intermediate core prices.

Intermediate foods: Prices for intermediate foods and feeds advanced 0.5 percent in April, after falling in each of the previous three months. A major factor in this increase was a 5.1-percent rise in the index for meats. Higher prices for natural cheese, except cottage cheese also played a significant role in the intermediate foods advance.

Intermediate energy: The index for intermediate energy goods inched up 0.1 percent in April, its second straight monthly rise. The index for electric power led the April increase, climbing 1.1 percent.

Full report go here.

Original content Bob DeMarco, All American Investor