Bloomberg News

Wholesale Prices in U.S. Fell for Third Month in November (2)

December 13, 2013

Wholesale Prices

A worker keeps watch over glass bottles before they are filled with ginger-flavored soft drink at the Ale-8-One Bottling Co. in Winchester, Kentucky. Photographer: Luke Sharrett/Bloomberg

Wholesale prices in the U.S. declined for a third month in November, reflecting lower costs for energy and cars.

The 0.1 percent drop in the producer-price index followed a 0.2 percent decrease the prior month, a Labor Department report showed today in Washington. The median estimate in a Bloomberg survey of 77 economists called for no change. The so-called core measure, which excludes food and energy, rose 0.1 percent.

Prices of goods and materials used in the earlier stages of production fell for a second month as slow improvement in global markets limited demand. Scant signs of accelerating inflation indicate Federal Reserve policy makers meeting next week have more room to maintain their unprecedented $85 billion in monthly asset purchases in order to help spur the expansion.

“Inflation remains quite tame,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, who correctly projected the drop in prices. “Over the course of the next year, the core numbers will drift up a little bit as the economy remains healthy and unemployment keeps falling.”

Estimates for the change in wholesale prices in the Bloomberg survey ranged from a drop of 0.3 percent to a gain of 0.5 percent.

Stock-index futures advanced, indicating the Standard & Poor’s 500 Index will rise from its lowest level in a month, as the House of Representatives passed the first bipartisan federal budget in four years. The contract on the S&P 500 expiring in March rose 0.1 percent to 1,771.1 at 8:49 a.m. in New York.

Core producer prices matched the survey median. Last month’s increase reflected higher costs for light trucks and agriculture equipment. While trucks were more expensive, the cost of cars fell 0.8 percent, the most since January.

Last Year

Compared with the same month a year earlier, companies paid 0.7 percent more for goods. The core index rose 1.3 percent in the 12 months ended in November following a 1.4 percent gain.

Finished energy costs decreased 0.4 percent from the prior month. The price of gasoline, heating oil and diesel declined.

The cost of finished consumer foods was unchanged.

Expenses for intermediate goods fell 0.5 percent, and those for crude goods decreased 2.6 percent, which was the most since June 2012. Crude energy materials, such as oil, coal and natural gas, fell by the most since August 2011.

Pittsburgh-based PPG Industries Inc., a supplier of manufacturing, construction, automotive and chemical products, is among companies betting low price pressures will be maintained through next year.

‘Modest Inflation’

“We’ve had fairly modest inflation,” Vince Morales, vice president of investor relations, said at a Dec. 11 conference. “As we go into 2014, we feel that the inflation environment is fairly consistent with 2013” as the cost of raw materials remains steady with “sufficient supply” among the company’s resources.

Producer prices are one of three monthly inflation gauges from the Labor Department. The import prices index declined 0.6 percent for a second month in November, another report showed yesterday. November figures for the cost of living index, the broadest of the three measures, are due for release Dec. 17.

To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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