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U.S. Wholesale Prices Rise Led by Services

Posted by Joseph Trevisani on Nov 18, 2014 10:29:00 AM

American produce prices unexpectedly increased in October as expenses for food and services overwhelmed a sharp fall in energy costs.

The produce price index gained 0.2 percent on the month after a 0.1 percent drop in September and a flat August, according to the Labor Department in Washington, D.C. today. The median forecast from the Bloomberg survey was for a 0.1 percent decline. The PPI index measures the cost of goods after production.

The annual price rise to October was 1.5 percent, higher than the 1.3 percent estimate but continuing a string pf progressively lower numbers since the more than two and a half year high of 2.1 percent in April. 

Wholesale prices excluding food and energy gained 0.4 percent in October; four times the 0.1 percent prediction following a flat September and a 0.1 percent increase in August. This 'core' index rose 1.8 percent in the twelve months to October up from 1.6 percent in September. The Bloomberg survey had predicted a 1.3 percent increase. The peak for the annual core index was 2.0 percent in May.

Prices in the service sector rose 0.5 percent, a good portion of which reflected margin increases in energy. Gas stations, home heating oil firms and other retail sellers of energy saw margins increase 21.6 percent, the most in four years indicating that prices to the final customer are falling less than the wholesale price to the supplier.

The price of a barrel of West Texas Intermediate, one of two main global oil standards, fell 15 percent in October, from $94.24 to $80.54. However the price of a gallon of regular gasoline dropped just 10 percent from $3.33 to $2.99. Gas price have continued to slide, the nationwide average was $2.88 yesterday, according to the American Automobile Association, the lowest in almost four years. 

Wholesale prices for goods skidded 0.4 percent, the most since April 2013. Energy expenses fell 3 percent and food costs rose 1 percent.

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Charts: Bloomberg

ppi nov 18

ppi annual nov 18

ppi core annual nov 18



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