Washington, DC, September 13, 2005—The Producer Price Index, driven by rising energy prices, rose 0.6 percent in August, compared to a 1 percent increase in July. The core index, which eliminates food and energy prices, was unchanged.
Economists had forecast an increase of 0.7% in the producer price index and a 0.1% gain in the core index.
The August data includes no information about the effect of Hurricane Katrina, which struck the Gulf Coast on Aug. 29, well after the PPI survey date. The September PPI will be surveyed on Tuesday. Much of the improvement in the August core rate was due to auto prices, which fell 1.3% in August and rose 1.5% in July, somewhat inexplicably.
Energy prices increased 3.7% in August after a 4.4% gain in July. Gasoline prices rose 9.5% in August.
Energy prices have risen 19.2% in the past year.
The surge in energy prices has pushed the year-over-year increase in the PPI to 5.1%, the worst wholesale inflation since a similar energy shock in December 1990.
The core rate is up a more moderate 2.4% in the past 12 months, down from 2.8% last month.
Inflation moderated further back in the production pipeline as well, at least temporarily.
Prices of intermediate goods destined for further processing before a final sale increased 0.7% after a 1% gain in July.
The core intermediate PPI fell 0.1% on declines in lumber and steel mill products. The intermediate core PPI is up 3.2% in the past year, down sharply from the peak of 8.5% in January. The core intermediate rate is often seen as a leading indicator for inflationary pressures at the finished and consumer levels.
Prices of crude materials increased 2.3%, down from 6.7% in July. Crude energy goods prices rose 3.8%, while basic industrial materials prices rose 4.6%.
Finished foods prices fell 0.3%, with large declines in prices of eggs, beef and fruits.
Prices of finished consumer goods other than food and energy fell 0.1%.
Prices of finished capital goods fell 0.1% in August.
