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Producer Prices Went Up 9.8%, But Inflation Went Down A Bit

The worst 12-month gain this year was seen in July as U.S. firm pricing increased 9.8% year over year.

The decrease in the Producer Price Index for final demand reported by the Labor Department in July was mostly brought on by reduced gasoline and oil prices. 1st monthly decline in nearly two years.

10.3% annual growth and 0.3% monthly growth were forecast by economists. The PPI increased by 1.1% from the previous month and by 11.3% from June 2021 last month.

The PPI increased 11.6% year over year in March.

After increasing by 0.3% in June, producer prices increased by 0.2% in July when food, energy, and trade services are excluded. After increasing by 6.4% in June, the index for final demand excluding food, energy, and trade services increased by 5.8% in July.

The final demand goods index, which measures ready-to-use commodities sold to consumers, businesses, and governments, dropped 1.8% in July, the most since April 2020. The price of energy on final demand fell by 9.0%, which accounts for this decrease. Prices for final demand, excluding energy, increased 1.0%. With food and energy excluded, prices increased by 0.2%.

Lower fuel costs are to blame for 80% of July's decline in the index for final demand goods.

Due to larger wholesaler and retailer profit margins ("trade services"), as well as higher warehousing and transportation costs, services prices also increased in the month. Trade margins increased by 0.3%. Prices for shipping and storage increased 0.4%. Service prices decreased by 0.1% when trade, shipping, and storage were absent.

Occasionally, the Producer Price Index (PPI) is referred to as wholesale inflation. Despite being known as the wholesale price index in the past, it never monitored wholesale prices. Instead of analyzing consumer spending and including imports or a substitute for house ownership called owners-equivalent of rent, the more well-known Consumer Price Index assesses what companies that make goods and services in the United States were paid for those goods and services.

“The Wholesale Price Index (WPI) was the name of the program from its inception in 1902 until 1978, when it was renamed the Producer Price Index,” the Bureau of Labor Statistics explains on its website. It explains that: “the term Wholesale Price Index was misleading in that the index never measured price change in the wholesale market.”

PPI measures prices for final demand, which refers to domestic manufacturers selling goods and services to domestic end-users, typically government agencies, consumers, or corporations. Intermediate demand refers to firms selling to other enterprises. The PPI headline figure represents final demand.

PPI does not include import costs paid to foreign suppliers or sales taxes paid to local and state governments. The CPI does not include export prices because they are paid for by consumers outside of the United States.

The PPI includes all of the marketed output from American producers. These include goods, services, and building materials purchased by other producers as inputs or capital investments, as well as consumer goods and services obtained directly from service providers or indirectly through retailers.

The CPI excludes government purchases, exports, and business purchases for capital investment or as product inputs when measuring the goods and services purchased for consumption by urban U.S. households. Prices that customers do not directly pay, such as medical expenses covered by insurance or government programs, are excluded from the CPI.

The preceding is a summary of an article that originally appeared on BREITBART.

Written by Staff Reports

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