Inflation Rate Lower in Final Months of 2001

The Labor Department's measure of overall producer price inflation fell by 0.6% between October and November of last year, following an even steeper 1.6% decline the month before. Further, energy prices declined by 3.8% during November after plunging 7.7% in October, and average food prices were 0.8% lower in November than in October, after falling 0.4% during the previous month.

But the inflation rate for other finished goods—referred to as the core Producer Price index (PPI)—rose by a modest 0.2% between October and November, after falling during two of the prior three months. On a seasonally adjusted basis, capital equipment prices rose 0.1% in November 2001, and were at the same average level then as during November 2000.

For the first 11 months of 2001, the PPI for finished goods actually decreased at a 1.3% seasonally adjusted annual rate (SAAR), after rising by 3.6% between 1999 and 2000. The index for crude goods like petroleum, natural gas, and scrap metal declined at a 27.2% SAAR through November of last year, after posting a 35.5% gain for the prior calendar year. This suggests that inflation won't be a problem anytime soon, since prices of materials and commodities entering the pipeline aren't costing any more than they did a year ago.