Producer Prices July 2009 – All Time Record Declines Across the Board

The BLS Reports Producer Price Data for July 2009:

The Producer Price Index for Finished Goods declined 0.9 percent in July, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decrease followed advances of 1.8 percent in June and 0.2 percent in May. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved down 0.2 percent in July after rising 1.9 percent in the prior month, and the crude goods index fell 4.5 percent following a 4.6-percent increase in June. (See table A.)

The downturn in finished goods prices was broad based. The index for energy goods fell 2.4 percent in July after climbing 6.6 percent a month earlier, prices for consumer foods decreased 1.5 percent following a 1.1-percent advance in the previous month, and the index for goods other than foods and energy edged down 0.1 percent compared with a 0.5-percent rise in June.

Before seasonal adjustment, the Producer Price Index for Finished Goods decreased 0.9 percent in July to 172.6 (1982 = 100). From July 2008 to July 2009, prices for finished goods fell 6.8 percent, the index for intermediate goods decreased 15.1 percent, and crude goods prices dropped 44.8 percent, all of which are record 12-month declines. Over the same period within finished goods, the index for energy goods fell 29.7 percent, prices for consumer foods moved down 4.2 percent, and the index for goods other than foods and energy rose 2.6 percent.

Seasonally adjusted, producer prices fell by 11.7 percent from 1 year ago, also an all time record:

producer-prices-july2009-seasonally-adjusted

… as we can see, deflation not only continues to run its course, but its impacts are showing at an accelerated pace and increasing magnitude.


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1 thought on “Producer Prices July 2009 – All Time Record Declines Across the Board”

  1. Nima,

    I like to look at that vs. corporate profits after tax. My belief is that CP turns before FG. Couple of reasons is if taxes are lowered then corporate profits increase starting the rebound, or if corporations can lean out enough vs. lower prices to start making a profit again then the excess is out. There is no doubt this is deflation, always looking for something to gauge a turn, doesn’t look like CP’s are making any substantial turn yet, profits are still declining at a pretty dramatic rate.

    http://research.stlouisfed.org/fred2/graph/?&chart_type=line&graph_id=0&category_id=&recession_bars=On&width=1000&height=600&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&preserve_ratio=true&id=PPIFGS,CP,&transformation=pc1,pc1,&scale=Left,Left,&range=Max,Max,&cosd=1947-04-01,1947-01-01,&coed=2009-07-01,2009-01-01,&line_color=%230000FF,%23FF0000,&link_values=,,&mark_type=NONE,NONE,&line_style=Solid,Solid,&vintage_date=2009-08-18,2009-08-18,&revision_date=2009-08-18,2009-08-18,&mma=0,0,&nd=,,&ost=,,&oet=,,

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