Producer Prices Decline 0.3%, Driven by Energy

More

Prices for finished goods dipped on the producer level in May by 0.3%, according to the Bureau of Labor Statistics. But deflation alarmists shouldn't begin raising their voices just yet. The core producer price index for finished goods -- that which strips out food and energy -- actually increased by 0.2%, matching April's rise. That's because May's overall decline was driven by energy, which fell by 1.5%. This indicates that neither inflation nor deflation is currently a threat.

First, here's a historical chart on the Producer Price Index (PPI) for finished goods:

ppi 2010-05.PNG

That volatility is almost entirely due to food and energy. They tend to jump around and create misleading conclusions on price trends. Taking those factors out of the equation, you get the following chart for core PPI:

ppi  - core 2010-05.PNG

As you can see, this measure is a lot more stable. It indicates that producer prices are largely steady. They have averaged 0.1% for the past twelve months. Over the past year, core PPI has grown 1.3%, which is an acceptably low rate of inflation.

At this time the price level appears under control on the producer level. We'll know tomorrow if the same holds true for consumers when BLS releases that data for May.

Note: All numbers above are seasonally adjusted.

Jump to comments
Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
Get Today's Top Stories in Your Inbox (preview)

What Do You See When You Look in the Mirror?

In a series of candid video interviews, women talk about self-image, self-judgment, and what it means to love their bodies


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Business

Just In