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Producer Price Index Returns to Upward Growth Path

The composite index of inputs into residential construction continued its steady upward trend, rising another 0.3 percent in July. This is the tenth consecutive monthly increase and leaves this particular index 7.3 percent higher than the same time last year.
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Producer prices resumed their upward growth path in July. Although there was a further decline in energy prices, it was not enough to offset rising food and core producer prices.

PPI for finished goods increased 0.2 percent on a month-to-month basis in July, with the food index rising 0.6 percent and the core index up 0.4 percent in July. Overall, the price index for finished goods is up 7.2 percent relative to July 2010.

The rise in the core index (finished goods excluding volatile food and energy prices) was driven by an increase in tobacco products (+2.8 percent) and light trucks (+1 percent).

The energy index was down 0.6 percent in July, with gasoline prices (-2.8 percent) and diesel fuel (-2.1 percent) leading this component lower. Declining prices for home heating oil (-1.5 percent) and residential gas (-0.9 percent) also contributed to the drop, but residential electric power (+1.2 percent) prices rose. Despite these recent declines, the energy price index remains 20.1 percent above its level of July 2010.

The rise in July was driven by strong growth in copper prices (+5 percent), due to increasing demand from China. There was also a moderate increase in the prices of asphalt (+2.4 percent), insulation materials (1 percent), lumber (0.5 percent) and steel (0.5 percent).

Countering these gains were declines in the prices of plywood (-1.4 percent), oriented strand board (-0.7 percent), gypsum (-0.6 percent) and cement (-0.4 percent). The prices of all other building materials fell within a range of ±0.3 percent.

– Courtesy of NAHB

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October 17, 2019, 9:18 am PDT

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