Subscribe to our free, weekly email newsletter!


Energy prices may soon stabilize say analysts

IHS Global Insight sees lower producer prices and well-anchored wages as signs that inflation should moderate in the coming months
By Patrick Burnson, Executive Editor
September 15, 2011

The latest Producer Price Index (PPI) shows that inflation remained in stand-still mode in August as an upsurge in food prices was offset by an equivalent decrease in energy prices.

“It’s a good-news, bad-news scenario,” said IHS Global Insight U.S. Economist Gregory Daco. “For shippers, it means getting a little break on fuel expenses.”

Food prices rose 1.1 percent boosted by higher meat prices, while energy prices fell 1.0 percent on lower petroleum, liquefied gas, gasoline and diesel prices. Core PPI inflation was up for the ninth consecutive month, gaining 0.1 percent. However, the year-over-year rate of increase is showing some tentative signs of plateauing.

Consumer goods prices were flat for the month – good news for households – but still 8.2 percent above last year – not so good news. IHS Global Insight expects these prices to edge down in the coming months as weaker demand puts downward pressure on prices. Capital equipment prices inched lower on weaker computer prices.

Overall, weaker economic growth domestically and abroad should continue to put downward pressure on most categories of producer prices with the exception of food prices (more susceptible to weather conditions). In an environment where producers have been squeezed by higher input costs (mostly from energy and food prices), the news of potential future declines in wholesale prices will be welcomed. But, it is uncertain whether battered businesses will want to reduce consumer prices as a result.

IHS Global Insight sees lower producer prices and well-anchored wages as signs that inflation should moderate in the coming months. If incoming economic data remains on the down side, this should push the Federal Reserve towards more monetary stimulus (but, probably not during the next FOMC meeting of September 20-21).

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Even though China’s costs have risen and the U.S. has now surpassed Mexico as the preferred locale for relocating offshored manufacturing, advantages can be fleeting and the challenges great

Memphis-based FedEx reported solid fiscal second quarter earnings results today. Quarterly net income of $616 million was up 23 percent annually, and revenue, at $11.9 billion, was up 5 percent. Operating income at $1.01 billion was up 22 percent.

UPS said this week that it has added significant space to some of its North America-based distribution facilities, which the company increases the total size of its supply chain solutions network size by roughly 1.2 million square-feet. The company’s total global supply chain solutions network is comprised of 596 facilities and about 32.8 million square-feet. UPS offers various services at these facilities, including: warehousing and fulfillment inventory, transportation and returns management; custom kitting and packaging; and store-ready displays.

A week ago, the average price per gallon of diesel gasoline saw its steepest decline in more than two years, when it fell 7 cents to $3.535. This week took that decline a step further, with the Department of Energy’s Energy Information Administration (EIA) reporting that the average price this week fell 11.6 cents to $3.419 per gallon.

With an eye on further expansion of its e-commerce business and related reverse logistics processes, transportation and logistics bellwether FedEx last night announced it has inked an agreement to acquire Pittsburgh-based GENCO, a third-party logistics (3PL) services provider specializing in product lifecycle and reverse logistics.

Article Topics

News · Global · Global Trade · Energy · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA