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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: vestor who wrote (27531)	7/14/1999 8:49:00 AM
From: surfinSteve	Read Replies (1) \| Respond to of 50167

U.S. Producer Prices Unexpectedly Fell 0.1% in June; 1st Drop in 4 Months By Vincent Del Giudice U.S. Producer Prices Fell 0.1% in June; Core Rate Fell 0.2% Washington, July 14 (Bloomberg) -- Prices paid to U.S. factories, farmers and other producers unexpectedly dropped in June -- the first decline in four months -- reflecting lower costs for energy, autos and computers. The producer price index fell 0.1 percent last month, the Labor Department said. The core rate, which excludes food and energy, fell 0.2 percent during the month. During May, the PPI rose 0.2 percent and core rate increased 0.1 percent. For June, analysts expected 0.1 percent increases in both the PPI and the core rate. ''Inflation is benign,'' said Kevin Flanagan, an economist at Morgan Stanley Dean Witter in New York, before the report. ''There's no urgency for the Fed'' to raise the overnight bank lending rate again to keep prices in check, he said. The decline in the overall PPI was the first since a 0.5 percent drop in February, the Labor Department said. The decline in the core rate was the first since a 0.2 percent drop in January. For the year to date, the PPI has risen at a 1.5 percent annual rate, compared with a 1.5 percent decline for the six months through June 1998. The core rate of the PPI has fallen at a 0.4 percent rate this year, compared with a 1.4 percent increase through June 1998. Producer energy prices fell 0.3 percent during June, the first decline since February, as both gasoline and home heating oil costs retreated. Food prices increased 0.4 percent, in part reflecting the biggest increase in beef costs since October 1985. Computers and Autos Computer prices dropped 1.4 percent in June, continuing a pattern. The last time producer computer prices rose was in September 1994. Producer tobacco prices were unchanged. Auto prices decreased 1.3 percent and prescription drug prices rose 0.2 percent. Intermediate goods prices increased 0.4 percent last month. Intermediate goods prices excluding food and energy rose 0.5 percent. Crude goods prices increased 1.4 percent during June, reflecting a 3.4 percent rise in crude oil costs. Crude goods prices excluding food and energy rose 0.5 percent. On June 30, Federal Reserve policy-makers raised the overnight bank lending rate a quarter point to 5 percent to cool economic growth and keep inflation from accelerating. It was the Fed's first rate increase since March 1997. ''They're being pre-emptive,'' said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis. The Fed has repeatedly expressed concern about the economy's strength and the effects of that strength on demand and ultimately on prices. Underscoring the Fed's concern, a recent survey showed more companies find it easier to raise prices on the goods and services they produce. Businesses said they expect that situation to continue through the rest of this year as consumer demand stays high, according to the survey released last week by the National Association for Business Economics. Steel and Oil Allegheny Teledyne Inc., of Pittsburgh, the world's biggest specialty-metals maker, said it will raise its stainless steel prices by about 7 percent because of higher costs for the raw materials used to make the product. Rival producer J&L Specialty Steel Inc. said it will match the increase by reducing discounts to certain customers. Stainless steel, made with chromium and sometimes nickel, is used in autos, appliances, surgical tools and other products. Benchmark nickel prices on the London Metal Exchange have risen more than 15 percent in the past three months. Today's report showed prices of intermediate steel mill products rose 1.1 percent in June after declining in the two previous months. Oil prices, too, have been creeping higher. Crude oil closed above $20 a barrel yesterday for the first time since November 1997. An industry report this week showed that strong gasoline demand led to an unexpectedly large drop in motor fuel inventories. Demand from gasoline wholesalers, as derived from American Petroleum Institute figures, rose 5 percent to 9.55 million barrels a day, the second highest level ever, according to Bloomberg calculations. Yet, computer prices keep falling. Intel Corp., the leading computer-chip maker, last month lowered prices on its low-cost Celeron microprocessors by as much as 21 percent as it steps up its push to gain business in the market for cheap personal computers. Tomorrow, the Labor Department is expected to report the consumer price index increased 0.1 percent in June after showing no change during May, analysts said. The CPI core rate probably increased 0.2 percent last month after rising 0.1 percent during May, analysts said.