Sharp Decline in Energy Prices Pushed PPI Lower in October

Daily Forex Fundamentals | Written by Wachovia Corporation | Nov 18 08 14:34 GMT |

The Producer Price Index (PPI) fell 2.8 percent in October, driven by a sharp drop in energy prices of 12.8 percent. Core PPI, which excludes food and energy prices, rose 0.4 percent. Core crude materials fell 17.0 percent, the biggest drop on record. The Fed continues to have the green light to ease policy at the December 16th FOMC Meeting. Headline PPI Falls for the Third Consecutive Month Headline PPI fell 2.8 in October with energy and food prices falling 12.8 and 0.2 percent on the month. Consumer goods fell 3.7 percent, driven by a 24.9 percent fall in gasoline prices. Core PPI rose 0.4 percent on the month. Consumer goods such as jewelry, mobile homes, soap, tires and alcoholic beverages posted gains. Pipeline Pressures Beginning to Ease Core crude goods fell 17.0 percent, the fastest decline on record, primarily driven by declining commodity prices. Prices for intermediate goods fell 3.9 percent on the month. Intermediate prices, excluding food and energy, fell 1.7 percent. As global economic growth trends downward, wholesale price inflation should be less of a problem 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.