PPI 1.7% monthly(22.4% annualized-highest Producer's PI inc since 1/90

[papau]

Excluding energy and food costs, which can swing widely from month to month, "core" wholesale prices climbed in October by 0.3 percent for the second month in a row. The PPI figures showed larger gains than economists were expecting. They were forecasting overall wholesale prices to go up by 0.6 percent in October and core prices to edge up by 0.1 point. The 1.7 percent increase in the overall PPI was the largest advance since January 1990.


http://ap.tbo.com/ap/breaking/MGBZUWL5M1E.html

Wholesale Prices Jump by 1.7 Percent in October
By Jeannine Aversa
Associated Press Writer


WASHINGTON (AP) - Propelled by sharply higher energy and food costs, wholesale prices soared by 1.7 percent in October, the largest increase since early 1990.
The Producer Price Index measures costs of goods before they reach store shelves. The big over-the-month jump came after wholesale prices edged up just 0.1 percent in September, the Labor Department reported Tuesday. Concerns about inflation have driven the Federal Reserve's credit-tightening policies of recent months.
===========================================================================
http://www.bls.gov/news.release/ppi.nr0.htm

NOVEMBER 16, 2004

Producer Price Indexes -- October 2004

The Bureau of Labor Statistics of the U.S. Department of Labor
reported today that the seasonally adjusted Producer Price Index for
Finished Goods advanced 1.7 percent in October. This gain followed a 0.1-
percent rise in September and a 0.1-percent decrease in August. At the
earlier stages of processing, prices received by the manufacturers of
intermediate goods went up 0.9 percent, after increasing 0.1 percent in the
prior month. The index for crude materials turned up 4.3 percent in
October, compared with a decline of 4.2 percent in September. (See table
A. Monthly and annual percent changes in selected stage-of-processing price
indexes, seasonally adjusted:Finished goods 2004: Jan.. 0.6...Feb... 0.1....Mar. 0.6...Apr...... 0.7......May..... 0.6....June.....r -0.2...July.... 0.1....Aug.... -0.1...Sept.... 0.1...Oct.....1.7)


Before seasonal adjustment, the Producer Price Index for Finished
Goods increased 2.2 percent in October to 151.9 (1982=100). From October
2003 to October 2004, prices for finished goods advanced 4.4 percent. Over
the same period, prices for finished energy goods went up 17.2 percent, the
index for finished goods other than foods and energy climbed 1.8 percent,
and the index for finished consumer foods rose 2.5 percent. Prices for
intermediate goods moved up 9.0 percent during the 12-month period ended
October 2004, and the crude goods index jumped 15.7 percent.


*****
Producer Price Index data for November 2004 are scheduled to be released on
Friday, December 10, 2004, at 8:30 a.m. (EST).

Brief Explanation of Producer Prices Indexes

The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS)
is a family of indexes that measure the average change over time in
the prices received by domestic producers of goods and services. PPIs
measure price change from the perspective of the seller. This contrasts
with other measures, such as the Consumer Price Index (CPI). CPIs measure
price change from the purchaser's perspective. Sellers' and purchasers'
prices can differ due to government subsidies, sales and excise taxes, and
distribution costs.

More than 8,000 PPIs for individual products and groups of products
are released each month. PPIs are available for the products of virtually
every industry in the mining and manufacturing sectors of the U.S. economy.
New PPIs are gradually being introduced for the products of industries in
the trade, finance, and services sectors of the economy.

More than 100,000 price quotations per month are organized into three
sets of PPIs: (1) Stage-of-processing indexes; (2) commodity indexes; and
(3) indexes for the net output of industries and their products. The stage-
of-processing structure organizes products by class of buyer and degree of
fabrication. The commodity structure organizes products by similarity of
end use or material composition. The entire output of various industries
is sampled to derive price indexes for the net output of industries and
their products.


Data Collection

PPIs are based on selling prices reported by establishments of all
sizes selected by probability sampling, with the probability of selection
proportionate to size. Individual items and transaction terms from these
firms are also chosen by probability proportionate to size. The BLS
strongly encourages cooperating companies to supply actual transaction
prices at the time of shipment to minimize the use of list prices. Prices
submitted by survey respondents are effective on the Tuesday of the week
containing the 13th day of the month. This survey is conducted primarily
through the mail.

Price data are provided on a voluntary and confidential basis; only
sworn BLS employees are allowed access to individual company price reports.
BLS publishes price indexes instead of unit dollar prices. All PPIs are
subject to revision 4 months after original publication to reflect the
availability of late reports and corrections by respondents.

.

Price Index Reference Base

Effective with publication of January 1988 data, many important PPI
series (including stage-of-processing groupings and most commodity groups
and individual items) were placed on a new reference base, 1982=100. From
1971 through 1987, the standard reference base for most PPI series was
1967=100. Except for rounding differences, the shift to the new reference
base did not alter any previously published percent changes for affected
PPI series. (See "Calculating Index Changes," below.) The 1982 reference
base is not used for commodity indexes with a base later than December 1981
or for industry net output indexes and their products.


In 1998, the PPI implemented the X-12-ARIMA Seasonal Adjustment
Method; prior to that year the PPI employed the X-11 method. Each year,
the seasonal status of most commodity indexes is re-evaluated to reflect
more recent price behavior. Industry net output indexes are not seasonally
adjusted. For time series that exhibit seasonal pricing patterns, new
seasonal factors are estimated and applied to the unadjusted data for the
previous 5 years. These updated seasonally adjusted indexes replace the
most recent 5 years of seasonal data.


Since January 1988, the PPI has used Intervention Analysis Seasonal
Adjustment methods to enhance the calculation of seasonal factors. With
this technique, outlier values that may distort the seasonal pattern are
removed from the data prior to applying the standard seasonal factor
estimation procedure. For example, a possible economic cause for large
price movements for petroleum-based products might have been the Persian
Gulf War. In this case, intervention techniques allowed for better
estimates of seasonally adjusted data. On the whole, very few series have
required intervention. Out of nearly 900 seasonally adjusted series, only
16 interventions were performed in 1997.

[ewagner]

1. This confirms

what we've been seeing at the grocery store over the past few months. Also we're seeing climbing prices in almost all goods we buy and this desn't take into consideration the hidden inflation of a manufacturer/producer charging the same retail price but reducing the quantity....there's been a LOT of that.

[durablend]

2. Gee...NO SHIT SHERLOCK!

(talking about these analysts/economists, not the OP)

Anyone that shops at the supermarket, fills the car's gas tank and has to pay to heat their house could've figured this out by themselves.

Oh, but I forget...these economists are making 6 figure salaries and/or have "people" to do the dirty work (shopping, etc.) :eyes:

[Massacure]

3. So if I pulled out all my receipts from last month

And bought everything again, I would pay 1.7% more? Yikes!!!