Producer Price Inflation Moderates (temporarily) in June 2011

Great!  The Producer Price Index (PPI) in June 2011 declined month-over-month 0.4%, and year-over-year moderated from 7.3% to 7.0%.  On the surface, the headlines tell the story, but below the headlines the upward pressure on prices do not appear to have moderated.

The understory is that it was caused by moderating oil prices.  I sit this morning in front of my monitors watching crude prices again approaching the highs before the intervention of the IEA / US Government to try to moderate the oil price increases (analysis here).

The arrows in the above chart tell you this decline is all about oil prices.  But if you look at foods, and all items but food and energy – the increases continue.  The fall in the PPI is simply a lull in the storm.

Econintersect has shown how the pricing changes moves from the PPI to the Consumer Price Index (CPI).  This YoY change implies that the CPI – which will be released later this week, should come in a little over 3% YoY.  Last month the CPI YoY change was 3.6% (analysis here) – and Econintersect also predicted a little over 3% YoY growth.

Related Articles

Export / Import Price Growth Moderates in June 2011 by Steven Hansen

CPI: Consumer Price Increases Rise to 3.6% in May 2011 by Doug Short & Steven Hansen

Two Measures of Inflation: Prices and Expenditures by Doug Short

Inflation: Short- and Long-term View by Doug Short, Steven Hansen and John Lounsbury

Beware: Core CPI Follows Food Inflation by Steven Hansen

Share this Econintersect Article:
  • Print
  • Digg
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • LinkedIn
  • Wikio
  • email
  • RSS
This entry was posted in Prices - PPI, CPI and More and tagged , , , , , , , , , . Bookmark the permalink.

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.