WASHINGTON – Producers saw a year-over-year gain of 9.8 percent on the prices they pay for goods in July, the largest such increase since June 1981, according to a report issued today by the Labor Department.
The Producer Price Index (PPI) also showed a 1.2-percent increase over the price levels for June, which followed a 1.8-percent increase in June over May’s levels. The July increase was twice as much as was forecast by a Bloomberg News survey of 77 economists, whose estimates had ranged from 0.1 to 1.8 percent.
“It’s not a pretty number,” Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, told Bloomberg News. “Today’s PPI is a bit of an echo and maybe a little bit of a rude reminder of how much of a problem inflation was in July.”
Core prices, those excluding fuel and food costs, increased 0.7 percent, after showing a 0.2-percent gain in June, despite a 21-percent decline in oil prices, a 15-percent fall in copper prices and a 14-percent drop in the price of corn, although diesel fuel and natural gas costs increased 2.6 percent and 7.8 percent, respectively. Producers paid 0.2 percent less for gasoline. Overall, prices for raw materials, or so-called crude goods, increased 4.2 percent, after a 3.7 percent rise the prior month.
The PPI is one of three monthly inflation gauges that the Labor Department reports. Import prices increased 1.7 percent in July month over month, while consumer prices increased 0.8 percent. Both figures were higher than estimated.
Additional information, including the 18-page Producer Price Indexes report, is available from the U.S. Department of Labor’s Bureau of Labor Statistics at www.bls.gov/ppi.
