Wholesale Prices Fall as Crude Petroleum Prices Drop: U.S. Producer Prices Experience -0.2% Decline in May 2024

Published / Modified Jun 13 2024
Source: U.S. Department of Labor, CSIMarket Team / CSIMarket.com

Producer Price Index: U.S. Producer Prices Dropped by -0.2% in May 2024

The U.S. Department of Labor recently released its economic report on the Producer Price Index (PPI) for May 2024, revealing a decline in wholesale prices.
The main contributing factor to this drop was lower crude petroleum prices.
This article will delve into the details of the report, providing insight into the various sectors and their performance within the PPI.

In May 2024, the producer price index experienced a decrease of -0.2% on a seasonally adjusted basis.
This decline raises concerns as consumer spending is a significant driver of domestic economic growth.
Flat or declining retail sales are generally viewed as negative indicators.
However, despite this recent drop, the overall PPI has grown by 2.2% over the past 12 months.
ly, the core rate of producer prices increased at a higher rate than the total producer prices.

When focusing on finished consumer goods, prices sunk by -0.8% on a seasonally adjusted basis in May.
However, in an annual perspective, prices for finished consumer goods advanced by 1.6%. The core rate of the producer price index, which excludes the volatile food and energy categories, rose by 0.1% on a seasonally adjusted basis.
Notably, prices grew in capital equipment and non-durable goods, but deteriorated for materials used in manufacturing.

The core index of the producer price index is often considered a better measure of inflationary pressure as it excludes the volatile food and energy categories.
Over the past 12 months, the core rate of producer price inflation has grown by 2.4%, indicating steady inflationary trends within the economy.

Crude materials prices, including manufacturing materials, experienced a decrease of -1.8% on a seasonally adjusted basis.
Copper base scrap played a significant role in leading this decline.
However, the core rate for crude materials increased by 1.8%. The core component serves as one of the key leading indicators of inflation and its growth is an important consideration for investors.
Notably, prices for crude materials fell by -1.6% since May 2023.

Intermediate goods prices also saw a decrease of -1.5% on a seasonally adjusted basis, with processed fuels experiencing the most significant decline.
However, the core intermediate PPI, which excludes food and energy, increased by 0.1% on a seasonally adjusted basis.
This indicator is closely monitored as it serves as a key leading indicator of inflation.
Over the past 12 months, intermediate prices have decreased by -0.7%.
Investors are closely watching how corporations are passing on rising commodity prices to consumers, as this could potentially signal an increase in inflation.
Considering the latest economic report on the PPI, it is crucial to closely monitor inflationary trends and their potential impact on the overall economy.

In conclusion, the May 2024 report on the Producer Price Index reveals a drop of -0.2% in U.S. producer prices.
Lower crude petroleum prices played a significant role in driving this decline.
However, it is worth noting that the core rate of producer prices showed steady growth, though this was outpaced by the increase in total producer prices.
The report provides valuable insights into various sectors such as finished consumer goods, crude materials, and intermediate goods, all of which play a crucial role in shaping the overall economy.
Investors should carefully track inflationary trends and how corporations adjust prices accordingly.


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