Producer Price Index Price Increase Moderate in August 2011

With little price increases since April 2011, the Producer Price Index (finished goods) has moderated to 6.5% year-over-year – and is unchanged month-over-month.

The reasons for the moderation is simple – fuel prices have moderated.

There is moderate correlation between crude goods and finished goods as shown on the graph below (repeat from last month).  Lower crude material prices pull the finished goods prices down.

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 around 3.2% YoY. Last month the CPI YoY change was 3.6% (analysis here)..

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