As the global economic slowdown persists, prices paid by the nation’s producers managed to squeak a gain for the month of January, after five straight monthly declines. The US producer price index gained 0.8% in January, more than double of what was expected. This comes after record declines in the 4th quarter of 2008, totaling 6.9%. Wholesales energy prices, which fell 9.1% in December, have much to do with the rise in prices for the current month. Energy prices were up 3.7% for the month, as gas prices increased 15% at the producer level.
Core PPI, which excludes energy and food prices because of their volatile nature, increased as well, gaining 0.4% after a 0.2% gain the previous month. Economists had forecast a 0.1% rise in the core PPI.
In the last year, producer prices have decreased 1.0%, breaking its underlying upward trend. But core prices are still in this inflationary trend, as witnessed by its 4.3% gain in all of 2008, the largest year-over-year increase since 1988. Any increased demand in our economy and we may be looking at higher prices once more, especially with all the money being pumped into the economy by the Fed.
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