MNI DATA ANALYSIS: US PPI Rises 0.6%; Up 0.5% Ex Food, Energy>

--October PPI Ex. Food, Energy, Trade +0.2%; Trade Services +1.6%

--PPI +2.9% Y/Y Vs +2.6% In September; Ex Food, Energy +2.6% Vs +2.5%

By Kevin Kastner, Harrison Clarke, and Shikha Dave

     WASHINGTON (MNI) - Final demand PPI was up 0.6% in October, and PPI 

outside of food and energy was up 0.5%, both above expectations, but 

excluding trade services as well was up only 0.2%, data released by the 

Bureau of Labor Statistics Friday showed. 

     The year/year rate of inflation for final demand PPI was 2.9%, up 

from September, and PPI ex food and energy was up 2.6%, both above their 

September rates. However, the year/year rate for prices also excluding 

the volatile trade services category was up 2.8%, slower than 2.9% in 

September. The sharp gains in the headline data mask softer growth in 

underlying wholesale inflation. 

     The personal consumption price measure in the data, which some 

analysts use as a preview measure for the CPI and PCE price indexes, was 

up 0.8% overall and up 0.6% ex. food and energy, but was up only 0.2% 

also excluding trade services, suggesting moderate upside risk for the 

PCE inflation data. 

--ENERGY, FOOD PRICES UP  

     Energy prices rose 2.7% in October after a 0.8% decline in 

September, led in October by a 7.6% gain in gasoline, and a 7.3% gain in 

residential fuel. Most other energy components were also up. 

     Food prices were up 1.0% on widespread gains in most categories. 

     Trade services prices rose 1.6% in the month after a slight 

increase in September and large decline in August, while the PPI core 

rate the BLS prefers, which excludes the change in trade services as 

well as food and energy, rose 0.2% in October. 

     Within the core, there were generally mixed movements in a number 

of categories. Passenger car prices fell 1.0%, while light truck prices 

fell 0.6%. However, overall final demand services prices were up 0.7%. 

--Y/Y INFLATION ACCELERATES 

     The year/year rates for the overall measure rose in the month. 

Overall PPI was up 2.9% year/year in October after a 2.6% year/year rise 

in September. 

     At the same time, the year/year rate for PPI excluding food and 

energy rose to 2.6% from 2.5% in September, but the year/year rate for 

PPI excluding food, energy and trade services was up 2.8%, a slower pace 

than 2.9% in September. 

     ** MNI Washington Bureau: 202-371-2121 **

[TOPICS: MAUDS$,M$U$$$,MT$$$$]