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PPI Slides, Misses Estimates, After Finished Goods Prices Tumble Most Since July 2009
Final Demand Producer Prices fell 0.2% in November, more than the expected 0.1% drop, for the largest wholesale deflation since October 2011. This leads to a 1.4% YoY PPI, the weakest since March and has fallen for 7 straight months. The driver - unsurprisingly - Energy prices fell 3.1% MoM (5th monthly drop in a row) with fuels & lubricants plunging 7.7% MoM and there is more good news - alcohol fell 0.1% YoY for the 2nd month. Beef/Veal prices continue to surge (+28.6% YoY). Core PPI was unchanged on the month, also missing expectations. Prices for finished goods moved down 0.7 percent in November, the largest decrease since a 1.2-percent drop in July 2009, while prices for finished goods ex-food and energy were down -0.1% for the second consecutive month: the longest negative stretch in years.
Biggest deflation since Oct 2011:
Finished goods:
The breakdown:
And some more details from the report:
The index for final demand goods fell 0.7 percent in November, the fifth consecutive decrease. The broad-based November decline was led by prices for final demand energy, which dropped 3.1 percent. The index for final demand goods less foods and energy edged down 0.1 percent, and prices for final demand foods fell 0.2 percent.
Product detail: Sixty percent of the November decline in prices for final demand goods can be attributed to the index for gasoline, which dropped 6.3 percent. Prices for dairy products, pork, diesel fuel, residential natural gas, and primary basic organic chemicals also moved lower. Conversely, the index for pharmaceutical preparations increased 1.1 percent. Prices for fresh and dry vegetables and for soybeans also advanced.
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The index for final demand services inched up 0.1 percent in November subsequent to a 0.5-percent rise in October. In November, prices for final demand services less trade, transportation, and warehousing, as well as margins for final demand trade services, rose 0.1 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, the index for final demand transportation and warehousing services dropped 0.8 percent.
In November, a 4.0-percent jump in prices for loan services (partial) led the increase in the index for final demand services. Margins for machinery and equipment wholesaling, food wholesaling, and food and alcohol retailing, as well as prices for bundled wired telecommunications access services, also moved higher. Conversely, prices for airline passenger services moved down 1.9 percent. The indexes for automotive fuels and lubricants retailing; apparel, jewelry, footwear, and accessories retailing; and securities brokerage, dealing, and investment advice also decreased.
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Prices for finished goods moved down 0.7 percent in November, the largest decrease since a 1.2-percent drop in July 2009. (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 November decline was led by the index for finished consumer energy goods, which dropped 2.7 percent. The index for finished consumer foods fell 0.5 percent. In contrast, prices for finished goods less foods and energy edged up 0.1 percent. Within finished goods, falling prices for gasoline, dairy products, pork, residential natural gas, light motor trucks, and fresh fruits and melons outweighed rising prices for pharmaceutical preparations, fresh and dry vegetables, and beef and veal.
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We need more QE for the banksters to fight evil deflation. Funny though that real estate prices in New York City keep rising to levels exceeding 10 times those in flyover country. The owners of this country must be taken care of first.
That's good news!
Cause now the police forces can afford even MOAR great gear to keep the global warming moe-rons under control!
Betcha armored vehicles and killer drones cost less now!
A civilian police force.......just a powerful as our military.......kinda takes your breath away.
Yeah that choke hold shit has got to end now
Just shoot the suspects in the head from now on and throw them in the river.
Oh yeah... Work on being a better shot than your crazy neighbor...
Liars! My beer is not getting any cheaper. prices keep going up. Maybe I should start drinking wine of jack daniels -anyone noticed their prices going down?
prices are going down - you should obey your masters=)
good beer is expensive, about $9 for a 6-pack.
Good wine is very expensive, about $30 a bottle for the mid-level stuff.
Bourbon is very expensive.
However, you can still buy gut-rot for about $10-$15. Or, just switch to glue sniffing or medical pot.
I switched to pot a long time ago. When you grow your own it's even cheaper.
Where the heck do you live?
"Good wine is very expensive, about $30 a bottle for the mid-level stuff."
Not in California - many, nay most, really good Northern California Sauvignon Blancs are in the $15-$18 dollar range, and an acceptable Patianna is $11 at my local store. And yes, I've drunk very good, very expensive French wine, but California (and increasingly Oregon and Washington) wine can be just as good, and a hellava lot cheaper. Some people are willing to pay the freight on shipping Frence wine here for the snob appeal, but educated palates know better.
I agree. I am not seeing ANY price deflation on ANYthing. Save for gas that's about all I'm seeing. Still waiting for cheaper electronics and other products but not seeing it. And Christmas sales this year are sucky. Same old every day price with a snazzy sale sticker on it is not fooling anybody. RE also very stagnant for the past few months. Demand seems low here compared to norm yet prices are going nowhere...
In other news, Russia is dumping its gold: www.businessinsider.com/russia-gold-hoarding-ruble-problems-2014-12
FYI, the article has been edited to correct the error you just reported. Overall reserves have dropped, NOT the gold portion of them.
I would assume this means they've been selling dollars/Treasurys for rubles.
Is this good or bad? After the stupid moves in US stocks the last few days I know even less now than I did before...when does the point come that bad news MEANS bad news?
DavidC
Depends upon your perspective. Good news for those who would like to see the economy "take the bitter pill" in order that a true correction can start. Bad news for those who profit from the scam.
Either way though, pain will ensue as the massive over-productive capacity has to be shuttered/written off.
We should just use up some of our nukes on a number of rotting cities to hasten the correction.
Or maybe Vlad will help us along with that effort from the looks of things with Russia these days.
Let's start with Ferguson..
Did you see the video of poor Michael Brown beating the hell out of an old man and robbing him? Oddly, the media hasn't picked up on this yet. Just scroll to the bottom of the page...http://thecivillibertarian.blogspot.com/2014/11/who-really-killed-michae...
Prices fall during a recession.
Who are the economic gods that decided that GDP(altered to the Nth degree) was the only way to determine a recession?
It's time they admit the undeniable. QE is a failure.
Something else needs to be done.
Can we try capitalism? This time for real?
Nayphus. There will be no capitalism without the aristocracy/oligarchy say so. The rigging of markets, like the rigging of the tax code, has taken a lot of time, effort, and money. The very best we can hope for is to die in our sleep.
We deflated some folks.
What happened to all the helicopters?
Refueling. All that CTRL-P creates carpal tunnel, especially at Yellen's age.
alcohol fell? no way. I went into the liquor store yesterday looking for some bourbon and they wanted $45 for 750 ml of Basil Hayden.
I guess I just need to drink the cheap a$$ crap so I can experience the deflation.
Thanks to the emergence of all these new craft breweries, I'm starting to see better sale prices on ale, as well as more frequent.
One of the few benefits of working here in State U. town, I guess.
InDeflation -- Prices of things needed for existence inflate, while things wanted deflate. With no/lower wages, more and more will be spent on inflating needs, while less will be spent on unneeded wants. A death spiral.
When prices go up it is "noise" but when they go down it is "damn the torpedos QE ahead!"
No wonder the markets are so effed up...
Ya gotta have the deflation before you can have the great hyperinflation.
Because?
Raising rates in this environment?
We deflated some goods.