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  PPI falls 0.4% in June; "Core" prices up 0.3%
Posted Under: Data Watch • PPI
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Implications:  Due to a drop in energy prices, overall producer price inflation took a breather in June, with prices dropping 0.4%, a larger decline than the consensus expected.  Despite the decline in June, producer prices are up 7% versus a year ago, and with oil rebounding, overall producer prices are likely to rise in July.  Meanwhile, "core" producer price inflation, which excludes food and energy, is accelerating, rising 0.3% in June and up at a 3.7% annual rate in the past six months.  With the exception of late 2008 and early 2009 as well as a brief period in 2004-05, this is the fastest increase in the core PPI in 20 years.  Further up the production pipeline, core intermediate prices increased 0.3% in June and are up 7.2% versus a year ago.  Core crude prices are up 25.1% in the past year.  These data will eventually make it tougher for the Federal Reserve to justify holding short-term interest rates at essentially zero.  In other recent inflation news, import prices declined 0.5% in June.  The decline in June was mostly, but not completely, due to oil; ex-petroleum, import prices declined 0.2%.  Despite the decline in June, overall import prices are up 13.6% in the past year and up 4.9% excluding oil.  Export prices increased 0.1% in June and are up 9.9% in the past year.  Ex-agriculture, export prices were unchanged in June but are up 7.8% in the past year, the largest increase on record (dating back to the mid-1980s).  In other news this morning, new claims for unemployment insurance declined 22,000 last week to 405,000.  Continuing claims for regular state benefits increased 15,000 to 3.73 million.

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Posted on Thursday, July 14, 2011 @ 12:27 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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