us ppi core index down

  1. 165 Posts.
    The overall PPI was 0 but the core rate was down 0.30%.

    This means there is no Pricing Power for companies and the only way to increase profit is to let people go, which it turn reduces demand, then the core PPI drops is a deflationary sign - which is a problem for stock & gold (as gold is meant to be a hedge against inflation not deflation).


    This is extracted from a Bloomberg Article.

    "The index of wholesale prices unexpectedly held steady at 139.5 following a 0.4 percent drop in November, the Labor Department said. Excluding food and energy, prices in the so- called core index dropped 0.3 percent after falling 0.3 percent the previous month.

    ``With the economy slow, there is just no prospect of sustained price gains going forward,'' said Stan Shipley, a Merrill Lynch & Co. economist in New York, before the report.

    General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler unit sweetened incentives to lure buyers as consumer confidence wanes and economic growth slows. The price of the vehicles automakers sold to dealers declined 2 percent for the month, the report said. Inflation will probably stay tame as companies use discounts to revive demand.

    Economists had expected a 0.3 percent rise in producer prices, based on the median estimate of 62 forecasts in a Bloomberg News poll, and a 0.1 percent increase in the core rate. Prices rose for energy, gasoline and food, and declined for autos and capital equipment

    For all of last year, wholesale prices rose 1.2 percent, compared with a 1.6 percent decline in 2001. Core prices declined 0.4 percent in 2002, the biggest drop since the government began keeping the records in 1973. That compared with a 0.9 percent rise the previous 12 months."
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