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Wednesday, March 17, 2010

PPI Stabilizing...

Marketwatch reports:

Wholesale prices fell a larger-than-expected 0.6% in February after seasonable adjustments, with energy prices falling 2.9%, the Labor Department reported Wednesday. This is the largest decline since last July. The producer price index has risen 4.4% in the past year, the government said.

The core PPI - which excludes food and energy prices - rose 0.1% in February, more than expected. Core prices are up 1.0% in the past year. Economists surveyed by MarketWatch expected a 0.3% fall in the headline PPI and a 0.1% decline in the core rate. The PPI had risen 1.4% in January, while the core rate was up 0.3%.

Of all the information portrayed in the chart below, the most telling is the relatively low year over year headline PPI figure when compared to the spike in energy and materials.

It shows just how powerful the relationship is between the cost of labor and finished goods.

Source: BLS