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.8% decline in Producer Price Index in November

.8% decline in Producer Price Index in November reported per the 8:30 A.M. November 13th report by the Bureau Of Labor Statistics.

The bureau further reported a decrease of .2% in finished goods in October, which followed a 1.1% rise in September.  In the initial stages of processing, prices obtained by manufacturers or intermediate goods declined 1.2% in November, while the crude goods index edged up .1%.   The bureau reported that on an non adjusted basis, the finished goods index advanced 1.5% for the twelve months ending November 2012.

The bureau stated that the declined in the finished goods index in November was due to a sharp decline of 4.6% in finished energy goods.   Prices for the finished foods inventory rose  1.3% in November, the sixth consecutive monthly increase.   Low oil and fuel prices were cited again as the primary reason for the .8% decline in the Producer Price Index.   Since fuel prices continue to fluctuate dramatically over time, these prices may fluctuate as well.  Expect the price index to possibly increase for the November report or December report, or possibly both, due to increasing oil and fuel prices in the period just prior.    The (PPI), Producer Price Index is tied closely to commodity prices, not just fuel, but other raw materials.   If the prices of other raw materials, such as metals increase, this will further push up prices and the (PPI), producer price index.

The producer price index also included the price of food commodities, which is also affected by the price of crude oil and fuels.  When the price of any crude oil increase in any given month is removed from the math, in most of those cases, the Producer Price increase will reflect and increase in most of those cases.   The main exception to this is in the prices of food commodities.   In many years, if there is a bumper crop, food commodity prices will go down and lower the (PPI), even when lower fuel prices are taken out of the factoring.