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

Having introduced into the California State Senate a new bill designed to give an exemption from sales and use tax for port terminal operators purchasing zero or “near zero-emission” equipment, Lara is trying to advance two agendas.

The notions of “green shoots” or “cautious optimism” in gauging the current state of the economy does not specifically exhibit what is really happening, when assessing how things are actually going, it seems. That was made clear by Bob Costello, chief economist at the American Trucking Associations, at last week’s NASSTRAC (National Shippers Strategic Transportation Council) Shippers Conference and Transportation Expo in Orlando, Fla. last week.

With a 6.8 cent gain to $2.266 per gallon, this week’s average diesel price is at its highest level since the week of December 28, when it was at $2.237 per gallon.

Manufacturing activity in April remained on the right side of growth for the second straight month, following six months of contraction, according to the April edition of the Manufacturing Report on Business from the Institute for Supply Management (ISM).

Some 22 centuries after the original Silk Road smoothed the path of Chinese silk merchants to Europe, a new effort is beginning to build a new 21st century highway between Europe and the burgeoning economy of China, now the world’s fastest-growing market.

Article Topics

News · Global · Global Trade · Energy · All topics

Comments

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


© Copyright 2016 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA