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| December Producer Price Results (#1) - Jan. 13, 2006 |
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Summary
Earlier this morning, the Labor Department reported that producer prices in December rose 0.9%, reversing November's 0.7% decline. During December, the so-called "core" rate, which excludes food and energy, rose 0.1%, the same change as reported for November.
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* The Labor Department reported this morning that the Producer Price Index rose 0.9% during December, more than offsetting November's 0.7% decline.
* The increase was led by a 3.1% rise in energy prices. However, there also was a healthy 0.9% increase in food prices during the month.
* Excluding food and energy, or the so-called "core" rate, the PPI rose 0.1% during December.
* The consensus estimates for overall and core results ran around +0.4% and +0.1%, respectively. Thus, the consensus prediction meaningfully missed the overall number.
* For the 12 months ended December 2005, the overall PPI stood 5.7% higher than a year earlier. During the 12 months ended December 2004, this figure was +4.4%, indicating two important trends: the PPI's above-average change of the last couple years not only has persisted, it also has accelerated.
* If it appears I am de-emphasizing the more moderate changes in the "core" PPI, I am. In an economy that consumes as much energy and food as ours does, it is little more than a foolish measure constructed primarily to provide Washington and Wall Street a means of trying to fool people about their true costs of doing business and living.
Next Wednesday (1/18), the Labor Department will release the CPI for December, the third and last of the government inflation series we follow closely each month (import prices, PPI and CPI). Afterwards, I will publish a more detailed analysis of all three measures, as well as update the "Inflation Watch" graph on the home page of the GRA website.
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