Relief from Commodities Helps Restrain August PPI

Daily Forex Fundamentals | Written by Wachovia Corporation | Sep 12 08 13:38 GMT |

The Producer Price Index (PPI) fell 0.9 percent in August led by a 4.6 percent decline in energy prices. The core PPI moderated from July as well but saw a sizable 0.9 percent increase in apparel goods. Inflation further back in the pipeline also showed signs of deceleration which the Fed should take comfort in at next week’s FOMC meeting. First Decline of the Year Headline PPI fell on a monthly basis for the first time since December 2007. Year-over-year, headline PPI is up 9.6 percent. Core finished goods prices remained well behaved in August, rising 0.2 percent. Year-over-year, however, core PPI remains uncomfortably high. Even further back in the pipeline, intermediate core prices continued to climb, up 1.7 percent. Lower Commodity Prices Brighten Outlook Pipeline inflationary pressures remain worrisome. Prices for intermediate goods are up 16.7 percent while crude goods are up 38.1 percent. This has to be taken in context. As long as commodity prices continue to recede on the back of slower economic growth, wholesale price inflation should trend lower in the coming months. Wachovia Corporation http://www.wachovia.com Disclaimer: The information and opinions herein are for general information use only. Wachovia Corporation and its affiliates, including Wachovia Bank, N.A., do not guarantee their accuracy or completeness, nor does Wachovia Corporation or any of its affiliates, including Wachovia Bank, N.A., assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or any foreign exchange transaction, or as personalized investment advice. Securities and foreign exchange transactions are not FDIC-insured, are not bank-guaranteed, and may lose value.