US BLS: EXCLUDING CIGARETTES JAN PPI +0.2%, CORE +0.1%
by Theresa A. Sheehan
WASHINGTON (MktNews) - The U.S. Bureau of Labor Statistics noted Thursday that the significant 4.9% drop in cigarette prices in January pulled the overall PPI number down to a flat reading from December, and core rate of producer inflation to a decrease of 0.2%.
However, excluding cigarettes the PPI would have shown an increase of 0.2% and the core reading would have been up 0.1%.
Brian Catron, an economist with the BLS, noted the change in price did not include any changes in excise taxes which may be reflected in the CPI report. "Because we don't actually have excise taxes [in the data], then those are actually excluded," he said.
"We don't seasonally adjust cigarettes anymore," Catron added. "They fell out of a seasonal pattern that was statistically significant."
The second big concern in the PPI report was the effect of energy prices, which rose 0.7% overall. However, the full impact of recent surges in oil prices may not have been captured. Analysts have expressed doubts about how accurately recent increases will be reflected.
Catron explained, "We actually have a single day of the month, Tuesday of the week containing the 13th of the month," used in calculating that component. In January that was the 11th.
"The 1999 year in general was one of steady increases in energy," Catron said, with gasoline rising 64.9% and fuel oil #2 increasing 76.5% compared to 1998 which saw a series of declines.
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