US PPI UP 1.1% IN SEPT BUT UP ONLY 0.1% EXCLUDING TOBACCO AND AUTOS
09:08 EDT 10/15 --Crude Materials Prices up 5.1% in September; Crude Core up 2.2%
WASHINGTON (MktNews) - September's 1.1% increase in the U.S. Producer Price Index -- the largest in nine years -- and the core rate's 0.8% increase, would have been considerably less without the anticipated jump in tobacco prices and the largely unanticipated hit from stable 1999 model year automobiles, the Bureau of Labor Statistics reported Friday.
In fact, without cigarettes or autos, the core rate would have been up only 0.1%, senior BLS analyst Brian Catron told Market News International, as the report was being made public.
But raw materials prices posted a 5.1% jump overall, with a 2.2% core-level increase. The annual rate of increase for crude materials reached its highest level since September 1989, at 16.1% Crude core materials has been "steadily accelerating out of the negative range from December 1998," Catron said.
The increase for automobiles was centered in 1999 models that did not get marked down at the very end of their model year as the seasonal adjustment factor expected, and the energy spike was centered in liquified petroleum gas. Gasoline was actually the biggest energy decelerator in the month, Catron said.
Tobacco has 4.6% weight in the core PPI and 3.0% in the overall finished goods index. Excluding just cigarettes the overall finished goods increase would have been up 0.8% instead of 1.1%. Without cigarettes in the core, it would have been up 0.3% instead of up 0.8%.
"Overall, obviously you got more help this month from an increase in energy prices, and that's nothing new," Catron said. "This month, it's shown a slower rate of increase, 2.2% versus 3.7% last month for finished energy goods. What helped in addition," Catron continued, "was a faster rate of increase for finished consumer foods, up a full 1%.
"In the core, it was kicked up again by a seasonally adjusted increase in passenger car prices," he said. "Normally this time of year, you close out the models for the '99 model year in September and you usually take a discounting or closeout price that is put on by manufacturers." In September, the PPI seasonal was looking for a 2.3% decline unadjusted "and it didn't happen. Passenger cars, unadjusted, dropped only 0.3%, pushing our adjusted figure up 2.0%."
"If we took finished goods core, took out cigarettes and cars, it would have been up 0.1%. So 0.2 points would belong to cars and 0.5 points would belong to cigarettes.
At the intermediate level, which saw a 0.3% increase overall and a 0.1% rise in its core, "it was a little different this month," he said. Construction materials which had seen "fairly consistent increases" fell for the second month. Led by softwood lumber and plywood, construction prices were off 0.5% in September after a 0.1% decline in August.
Elsewhere, "a sense of it, when you look down the column of changes, is nothing different from last month," he said.
"If you had to look at overall numbers, kind of as a group, if you're looking at 12-month rates of change, we had been in period of time in 1998 where they were all negative numbers, fed by energy price declines. This year," he continued "the picture is quite different, with the 12-month rates of change all positive, and in fact, accelerating."
"The overall finished goods number turned positive in January '99 and has pretty much been stepping up since then, and now for the past 12 months, have a 3.2% rate of change." Year-to-date, the PPI has gone up at a 3.5% annual rate.
Expectations in a Market News International survey of economists centered on an increase of 0.4% with the core rate for September also rising 0.4%. The range of forecasts was exceptionally wide, as analysts took note of the fact that PPI had been underestimated by 0.3 points in the past two Septembers. |
