Wholesale prices rise at slowest pace in 10 months

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Registered: 04-07-2002
Wholesale prices rise at slowest pace in 10 months
5
Tue, 06-14-2011 - 12:37pm
Wholesale prices rise at slowest pace in 10 months

Wholesale prices rose at the slowest pace in 10 months in May, as food costs fell and gas prices rose by the smallest amount in eight months. The figures suggest U.S. consumers could see some relief from rising prices soon.

By CHRISTOPHER S. RUGABER

AP Economics Writer

WASHINGTON —

Wholesale prices rose at the slowest pace in 10 months in May, as food costs fell and gas prices rose by the smallest amount in eight months. The figures suggest U.S. consumers could see some relief from rising prices soon.

The Producer Price Index, which measures price changes before they reach the consumer, increased 0.2 percent in May, the Labor Department said Tuesday. That's down sharply from a 0.8 percent rise in April and a 0.7 percent increase in March.

Over the past 12 months, the index has risen 7.3 percent. That's the largest such increase since the 12-month period that ended in September 2008.

Excluding volatile food and energy, the so-called "core" index also increased 0.2 percent. The gain was driven by higher prices for plastics, clothing and new cars. The core index has risen 2.1 percent in the past year.

Rapid increases in food and energy prices have driven up inflation since last fall. That has slowed the economy as consumers have had to spend more on those items and less on other goods.

Retail sales fell for the first time in nearly a year last month as consumers bought fewer cars, according to a separate report Tuesday from the Commerce Department. Auto sales dropped 2.9 percent last month, pulling down overall retail sales 0.2 percent. That was the first drop after 10 straight increases.

Supply disruptions stemming from Japan's March 11 earthquake have reduced the number of cars on dealer lots, and dealers are using fewer sales incentives. That pushed up car prices 0.5 percent in May, the wholesale price report said.

Wholesale food costs dropped 1.4 percent in May, the steepest drop in almost a year. Fruit and vegetable prices led the declines. Tomatoes plummeted 47.2 percent, the most since last June, while spinach prices dropped 48.4 percent and watermelons fell 73.7 percent, the most on record.

Gas prices, meanwhile, increased 2.7 percent in May, but that was the smallest rise since last September.

Gas prices have fallen further since last month, after nearly reaching $4 a gallon ($1.05 a liter) in late April. The nationwide average price dipped to just under $3.70 per gallon Tuesday, according to AAA. Still, that's up $1 from a year earlier.

Oil prices, meanwhile, fell to $97 a barrel Tuesday due to concerns that a slowing global economy will lower demand. A drop in Greece's credit rating has intensified concerns about a weakening of Europe's economy. And job creation fell sharply in the U.S. last month, the latest in a string of negative economic data.

 nwtreehugger  

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Registered: 02-15-2007

iVillage Member
Registered: 05-13-2009

Can you tell me why this indicates that things are "a whole lot worse"?

Isn't under control inflation, a good thing?

Retail sales drop is troubling, but the Japanese earthquake did impact car and electronic sales.

iVillage Member
Registered: 06-07-2011
"Yes We Can....make things a whole lot worse"!!
iVillage Member
Registered: 01-04-2011

Thank you, Obama.

iVillage Member
Registered: 03-18-2000

Oil Prices: Headed Up or Down?

Are oil prices headed up or down? If Saudi Arabia has anything to say about it, quite possibly down. Over the past several months, the kingdom has been clandestinely raising production levels. It’s been undertaking this in advance of Wednesday’s OPEC meeting.

It’s attempting to placate American, Chinese, and European oil consumers. According to an article in the Financial Times, the Saudis want to bring crude prices down to more “comfortable levels,” i.e. $80 to $90 per barrel.

The FT says Saudi Arabia raised its May output by 200,000 bpd, and has plans to raise it another 200,000 to 300,000 bpd this month.

That would peg its overall output above 9 million bpd for the first time since 2008. With global refinery demand for oil on the rise, especially from China, the increase couldn’t come at a better time.

Why is the demand from refineries increasing? It’s the end of their annual spring refinery maintenance shutdown period, when refinery outputs are traditionally at their lowest points of the year. During outages, demand for oil lessens. Just the opposite happens when they restart operations.

But part of the rise is due to the Saudi’s own power requirements. It’s hot in the desert, and air conditioning loads go up dramatically during the summer months.

Nine million bpd is about 1 million bpd more than the low point (8 million bpd) reached when the Saudis cut demand in response to the worldwide recession back in February of 2009. More info. at link above.

 


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