Prices for Finished Goods Post Biggest Increase Since 2008

BLS: Producer Price Index Rose 0.2% in May, following increases in March and April.

Prices for finished goods jumped 7.3% from May 2010 through May 2011 on an unadjusted basis, the largest year-over-year gain since an 8.8% advance in September 2008, according to the U.S. Bureau of Labor Statistics.

The monthly Producer Price Index, which measures the average change over time in the selling price that domestic producers get for their output, rose 0.2% in May, seasonally adjusted, according to the BLS.

The advance comes on the heels of increases of 0.8% in April and 0.7% in March.

At the earlier stages of processing, prices of intermediate goods climbed 0.9% in May, and the crude-goods index declined 4.1%, according to the bureau.

The BLS offered more analysis on the data for each respective stage of processing:

  • Finished goods -- According to the BLS, the May advance in the finished-goods index can be traced primarily to prices for finished-energy goods, which rose 1.5%. The index for finished energy goods increased 1.5% in May, the eighth straight monthly advance. Prices for gasoline moved up 2.7% and accounted for about three-quarters of the May rise.
  • Intermediate goods -- The Producer Price Index for intermediate materials, supplies and components moved up 0.9% in May, the 10th consecutive monthly increase. About two-thirds of the May rise can be traced to a 0.9% advance in prices for intermediate goods other than foods and energy. A 1.4% jump in the index for intermediate energy goods also contributed to the increase in intermediate-goods prices, according to the bureau. For the 12 months ended May 2011, intermediate-goods prices rose 10.3%, the largest gain since a 15.3% jump for the 12 months ended September 2008, according to the BLS.
  • Crude goods -- The Producer Price Index for crude materials for further processing decreased 4.1% in May. For the three-month period ending in May, crude-materials prices moved down 0.8% following a 13.6% increase from November to February. In May, about half of the broad- based monthly decline can be attributed to a 5.2% drop in the index for crude energy materials, according to the BLS. Also contributing to the May decrease, prices for crude foodstuffs and feedstuffs fell 4.4% and the index for crude nonfood materials less energy moved down 0.9%.

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