By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — U.S. wholesale costs rose in January for the first time in four months because of a spike in vegetable prices, but inflation at the producer level was generally muted.
The producer price index rose a seasonally adjusted 0.2% last month, the Labor Department said Wednesday. Economists surveyed by MarketWatch had predicted a 0.4% increase.
The cost of food advanced 0.7% to account for more than three-quarters of the increase in producer prices. Vegetables soared 39% — the biggest gain in almost one year — to drive up food costs.
Energy prices fell a seasonally adjusted 0.4%, but the index failed to capture the surge in gasoline costs that started shortly after the new year began. Higher fuel costs are expected to show up in the February PPI report.
Even with higher food prices and gasoline on the rise, inflation at the wholesale level is still subdued. The increase in producer prices over the past 12 months totaled just 1.4%, barely changed from the prior month.
Minus the volatile categories of food and energy, so-called core wholesale prices also rose 0.2%. That matched the MarketWatch forecast.
The biggest increase in wholesale costs outside the food category occurred among pharmaceutical products, precise industrial instruments and communications-networking equipment. Car prices dropped.
Over the past 12 months the gain in the core rate fell to 1.8% from 2.0% in December, marking the first time it’s slipped below 2% since February 2011.
Investors pay close attention to the core rate because it’s viewed as a more reliable barometer of short-term inflation trends. With inflation quiet, the Federal Reserve won’t feel in any rush to alter its massive bond-buying program designed to reduce interest rates and make loans for consumers and businesses easier to come by.
Meanwhile, the price index of intermediate goods such as cloth or rolled steel was unchanged in January. The cost of crude goods climbed 0.8%, however.
Steady increases in wholesale costs can squeeze profits and eventually translate into higher prices of consumer goods and services, but the relationship is not precise. Companies raise or lower prices for a number of reasons.
Lower wholesale costs can boost earnings and ease pressure on companies to raise prices on consumers. In some cases, businesses will even trim prices, especially for goods such as gasoline that are sensitive to ups and downs in commodity costs.
A measure of whether Americans are paying more for goods and services, the consumer price index, will be released Thursday. Economists surveyed by MarketWatch project the CPI edged up 0.1% in January.
Unlike the PPI, the consumer price index also measures changes in the cost of services — things like hair cuts, doctor visits or day care. Wholesale prices only reflect the cost of goods.
sangell says:
I’m not saying government inflation data is not gamed but ‘energy’ is a broad category that goes beyond motor fuels. Natural gas prices have been falling for the past month taking coal prices down with it. If you save $100/month on your heating, hotwater and electric bills and you only pay $80 a month more on gasoline you have a decline in total energy costs.
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20th February 2013 at 10:35 am
Administrator says:
sangell
This is PRODUCER PRICES, not consumer prices. Heating oil went up 2.9% in January.
Natural gas prices are up 20% since September 2012. They fell less than 6% in January from a 1 year high. Natural gas only accounts for 25% of our energy usage.
Coal prices were higher on Feb 1 than they were on Jan 1.
Your analysis is flawed. The weighted average of energy prices absolutely ROSE in January.
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20th February 2013 at 10:53 am
Eddie says:
I don’t know about you, but my electric bills are going up, not down. My office electric bill is well up over 50% over the last few months. Maybe because of this.
http://www.texastribune.org/2012/06/28/texas-regulators-ok-wholesale-electricity-price-hi/
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20th February 2013 at 10:54 am
Administrator says:
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20th February 2013 at 10:54 am
Administrator says:
Falling Natural gas prices? I think not.
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20th February 2013 at 10:56 am
Mark says:
It’s just lies to bring down anything with COLA. And to get what remaining sucker out there to buy Bonds.
On a further not, my prediction is rising food prices will doom the food service industry. People will just cut back here and opt to buy higher quality food retail, all be it at a higher price.
There is an Evoltionary logic here that dim witted economist can’t figure out.
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20th February 2013 at 11:02 am
card802 says:
Makes me wonder how much longer this administration can continue to deflect the truth.
Will people ever wise up? Or doesn’t it even matter anymore?
No matter what reality is the white house will issue their statement of what their version of the truth is and we had better believe it.
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20th February 2013 at 11:05 am
Bostonbob says:
Paid $4.09/gal for diesel this morning, paid $3.89/gal a about three weeks ago same station. I am glad I have gas heat/hot water/dryer/stove atleast for now. No inflation, it is stunning what complete and utter bullshit they have the balls to publish. I do believe most people while aware of the obvious inflation, they do not understand how complicite the government is in this whole game. They just accept that that is the way it is and there is nothing that they can do about it. I have tied to speak to people on this subject and am sadly stunned at the complete ignorance that most people display in there knowledge of basic economics. This will not end well.
Thank you,
Bob.
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20th February 2013 at 11:17 am
DaveL says:
“Can someone from the Federal Government please drop by TBP (maybe DHS can call the Labor Dept) and explain to us all how the fuck you can report a 0.4% DECREASE in energy costs in a month where ACTUAL energy costs rose by 6.7% to 7.7% percent?”
Jim, you are reading the wrong information. The PPI measurement of energy they are using refers the Pencil Pusher Index or the amount of productivity from bureaucratic workers in the government. The energy output only rose by .02 % because the employees were still a little tired from their two week Christmas/New Year vacations. You can expect a static energy output for this month due to the Presidents day vacations. And next month a decline in the overall PPI because they will be too depressed over sequestration.
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20th February 2013 at 11:19 am
Administrator says:
——————————————————————————–
Posted 2013-02-20 09:29
by Karl Denninger
PPI: If You Believe This Tripe…..
The Bureau of Lies and Scams says:
The Producer Price Index for finished goods advanced 0.2 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods declined 0.3 percent in December and 0.4 percent in November. At the earlier stages of processing, the index for intermediate goods was unchanged in January, and crude goods prices increased 0.8 percent. On an unadjusted basis, the finished goods index advanced 1.4 percent for the 12 months ended January 2013. (See table A.)
Is there supposed to be something in there that I believe? Specifically, am I supposed to believe that energy prices were down 0.4% on finished goods in January?
Really?
I’m supposed to believe finished energy prices were down when I see these charts? Green is red, red is red sort of stuff?
I dunno. Foods are supposedly down on intermediate and crude goods too.
If you believe these numbers there is neither large inflationary or deflationary pressure anywhere in the producer pipeline.
If.
There are some shockers in the data tables. Like, for instance, an 18.1% annual increase in the cost of crude foods. Or a 19.3% change in the cost of feeds (which makes sense, given the cost of food.) And the 7% change in the cost of crude fuels.
In the subindices the monster movers were vegetables, up 27% and a near-11% increase for eggs. Other standouts were chickens (up 9.2%) and pharmaceuticals (+6.3%). Computers collapse by 10% in price, and so did coffee — it’s good to be a geek who likes Joe.
But woe be to you if you need lumber or wallboard., or for that matter, wheat, corn or (unprocessed) chickens, or for that matter soybeans. Scrap steel prices, on the other hand, collapsed. (all on an annualized basis, thus you can safely ignore the seasonal lie machine.)
In short, nothing to see here, move along, the BLS is working its usual magic.
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20th February 2013 at 12:42 pm
Card802 says:
Bob,
Diesel is $4.29 in west mich. Diesel hasn’t been below $4.00 in months.
Regular gas is $3.89 down from $3.90 a week ago.
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20th February 2013 at 4:40 pm
GOVERNMENT LIES ABOUT INFLATION ARE BEYOND LAUGHABLE « The Burning Platform | owngoldllc says:
[...] on http://www.theburningplatform.com Share this:TwitterFacebookLike this:Like Loading… This entry was posted in Uncategorized by [...]
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20th February 2013 at 2:30 pm