November Producer Prices

November Producer PricThe Department of Labor’s Producer Price Index (PPI) grew month-over-month for the fifth consecutive month in November, up 0.8% for the month.  Energy led the jump followed by food, growing 2.1% and 1% respectively. Year-over-year the PPI is up 3.5%.

The energy component was dominated by heating oil and gasoline.  Gasoline was up 4.7% for the month and heating oil rose 7%! Year-over-year they are up 11.8% and 17.2% respectively.  Electricity (falling 0.2% for the month) and residential gas (off 2.2% in the same period) tamed the increase.

Fresh items lead the cost boost in foods.  Fruits and melons jumped 13.6% for the month.  This represents over half of the foods cost increase. Helping the other half of the escalation is the price increase of eggs which managed to grow by 22.7% after leaping 16.9% in October.  If this keeps up, Americans will have a financial duty to order hash browns instead of fruit with their breakfast.  Scratch that, cooking oils increase by 6.8% in November.  We may have to settle for rice.  Oh wait, that was up 16.4%.  Grits it is; corn fell 1.1%.

As costs associated with these goods rise, wholesalers will see their margins squeezed if they do not pass the prices on to the retailers.  If that happens it can be inflationary since prices for the goods we buy may increase.  Fortunately for us at Atlas, the cost of roasted coffee only went up 1.4%.  Based on the price of the swill we drink, we may be in for a $0.06 a pound increase. Let’s hope we fare better next month.