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Producer Prices Slide Driven By Biggest Plunge In Energy Since November 2013, Core PPI Rises Most Since May

Tyler Durden's picture




 

Following another monthly surge in the June PPI print, when it rose by 0.4%, or the second highest amount in a year, the July headline reading was a far tamer 0.1%. This was driven entirely by the plunge in energy prices (supposedly due to the Iraq military incursion and the "de-escalation" of the Ukraine civil war), which resulted in a -0.6% plunge in energy costs, which was the biggest monthly drop in over a year, matching the decline recorded in November of 2013. Offsetting the energy drop was a 0.4% increase in food prices, following two months of -0.2% decline. When stripping the volatile, and easily manipulated asset prices linked to brent, crude and the like, core PPI ex food and energy rose by 0.2%: the highest since March.

The monthly breakdown by component:

The breakdown:

Final demand services: The index for final demand services inched up 0.1 percent in July after rising 0.3 percent in the prior month. Leading the July increase, the index for final demand transportation and warehousing services moved up 0.5 percent. Margins for final demand trade services advanced 0.2 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand services less trade, transportation, and warehousing was unchanged.

 

Product detail: In July, prices for truck transportation of freight climbed 0.7 percent. Margins for automotive fuels and lubricants retailing and for apparel, footwear, and accessories retailing increased. The indexes for portfolio management and passenger car rental also moved higher. In contrast, margins for machinery and equipment wholesaling fell 1.7 percent in July. The indexes for loan services (partial); apparel wholesaling; and health, beauty, and optical goods retailing also decreased.

 

Final demand goods: Prices for final demand goods were unchanged in July after moving up 0.5 percent in June. In July, a 0.2-percent rise in the index for final demand goods less foods and energy and a 0.4-percent increase in prices for final demand foods offset a 0.6-percent decline in the index for final demand energy.

 

Product detail: In July, among prices for final demand goods, the index for pharmaceutical preparations rose 1.0 percent. Prices for meats, processed poultry, residential electric power, and light motor trucks also moved higher. Conversely, gasoline prices fell 2.1 percent in July. The indexes for soybeans, fresh and dry vegetables, grains, and gold and platinum jewelry also decreased.

 

Special grouping, Final demand less foods, energy, and trade: Prices for final demand less foods, energy, and trade services rose 0.2 in July following a 0.2-percent advance in June and no change in May. (The index for final demand less foods, energy, and trade services represents about two-thirds of final demand.)

 

Special grouping, Finished goods: Prices for finished goods inched up 0.1 percent in July after a 0.7- percent advance in June. (The finished goods index represents about two-thirds of final demand goods, through the exclusion of the weight for government purchases and exports. The finished goods index represents about one-quarter of overall final demand.) The July increase was led by prices for finished consumer foods, which climbed 1.0 percent. The index for finished goods less foods and energy edged up 0.1 percent. In contrast, prices for finished consumer energy goods declined 0.7 percent. Within finished goods, rising prices for meats, residential electric power, processed poultry, pharmaceutical preparations, and light motor trucks outweighed falling prices for gasoline, fresh and dry vegetables, residential natural gas, and gold and platinum jewelry.

The only question is whether Yellen will look at the rising Core PPI and consider it a less "noisy" indicator of the Fed's policy aftermath. The answer: as long as the S&P is below 2,150, a resounding no.

 

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Fri, 08/15/2014 - 08:52 | 5096726 asteroids
asteroids's picture

And in related stupidity. Stats Canada changed it's employment numbers from +200 to +47,000 for the month of July! Just goes to show you that Canadians can bullshit just as well as Americans eh?

Fri, 08/15/2014 - 13:03 | 5098362 KnuckleDragger-X
KnuckleDragger-X's picture

Yes but they are more polite about it...

Fri, 08/15/2014 - 08:54 | 5096733 ...out of space
...out of space's picture

fall in energy price show a world gdp go down, this time lead by eu contry

Fri, 08/15/2014 - 09:22 | 5096799 piratepiet
piratepiet's picture

the EU is not a country or nation state.

Fri, 08/15/2014 - 10:11 | 5097218 ...out of space
...out of space's picture

i know but i thing you get it what was i thinking

Fri, 08/15/2014 - 09:50 | 5097049 Hal n back
Hal n back's picture

its getting tougher for govt to fling the bs--energy prices down, economy booming?

 

economy booming people earning less, workingfewer hours at less quality jobs?

 

When I was a corp controller when we fudged the books at least we did everything to be consistent with the story line.

 

 

 

 

Fri, 08/15/2014 - 08:57 | 5096745 Dr. Engali
Dr. Engali's picture

Labor day is just around the corner, and operation fuck the American driver will be in high gear. That energy 'plunge' will be erased before we know it.

Fri, 08/15/2014 - 08:57 | 5096752 disabledvet
disabledvet's picture

Google search "Colimbian coal imports."

Fri, 08/15/2014 - 09:04 | 5096780 ekm1
ekm1's picture

The energy "plunge" is like saying the knife is penetrating the boddy slower.

 

Energy is up 300% when inflation is measured properly, 5 year and 10 year spans.

 

I call this energy price hyperinflation

Fri, 08/15/2014 - 09:57 | 5097113 El Hosel
El Hosel's picture

Exactly, energy up 300% average wages NOT up... "Recover from that" low inflation.

Fri, 08/15/2014 - 08:56 | 5096747 disabledvet
disabledvet's picture

Just posted here car prices are plunging too. Need to read your own site sometime before writing.

Fri, 08/15/2014 - 09:34 | 5096830 Wait What
Wait What's picture

funny coincidence. just as the Fed 'discovers' that the finance arms of US car makers are not only about to pass out from blowing the subprime bubble to infinity, but also running at default rates more than 250% higher than banks, car prices begin to plummet.

whocouldaknowd?

OT: anyone notice the TIC flows report? ugly, ugly, ugly.

                          21   Net Foreign Acquisition of Long-term Securities                           : 375.7 -368.6 -87.4 -95.2 6.9 -51.6 7.7 -30.2
Fri, 08/15/2014 - 09:03 | 5096760 ejmoosa
ejmoosa's picture

I contend that there are two components to inflation/deflation:  Supply/demand and printing of money.  We know that dollars are not coming out of the system.  So the drop in energy is entirely due to demand.  We are in a recession by all measures except for the officially reported one.

 

At what point will the mainstream media turn on these central bankers and call them on their inept actions, which continue to make things worse?  

 

Frankly, I think it is too late.  

Fri, 08/15/2014 - 09:07 | 5096787 ekm1
ekm1's picture

"Energy plunge"???

 

What has zerohedge become? CNBC?

 

You guys becoming main stream too much now

Fri, 08/15/2014 - 09:08 | 5096795 ajkreider
ajkreider's picture

Ah, so now ZH is focused on core CPI. When did that happen?

Fri, 08/15/2014 - 09:55 | 5097098 juggalo1
juggalo1's picture

But I thought inflation was going out of control?!?  How can this be happening?  I thought Benny and the Inkjets were ruining the dollar.  I trust Zerohedge is working on their full retraction and apology.

Fri, 08/15/2014 - 10:13 | 5097234 venturen
venturen's picture

rotation baby. Have you tried to buy meat lately...record prices across the board. You can't make profit just holding one commodity up....you need to find a chump and then you dump!

Fri, 08/15/2014 - 11:14 | 5097704 Sam Spade
Sam Spade's picture

The CRB Commodity Index (which tracks 19 base commodities) is down about 10% in just the last 6 weeks.  I have a feeling the economy is approaching stall speed.

Fri, 08/15/2014 - 10:12 | 5097226 venturen
venturen's picture

I guess Goldman dumped it for some profit...get ready for the next leg up on some pumping. Got to make those bonuses 

Fri, 08/15/2014 - 10:31 | 5097372 madbraz
madbraz's picture

"Core PPI drops the most since May" ?????

That is one stupid headline.

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