Finished Goods Prices Show Disturbing Gains

Staff -- Graphic Arts Online, 12/1/2000

The Producer Price Index (PPI) for finished goods rose a disturbingly strong 0.9% during September, the sharpest monthly gain since February. This was a dramatic reversal of recent trends, where the PPI fell 0.2% in August after recording no movement the previous month.

Most but not all of the sharp August-through-September increase could be attributed to sharply higher energy prices. The "core" PPI measure (excluding all food- and energy-related items) rose a more moderate 0.3% over the month, although this still was the most abrupt gain registered over the past four months, industry analysts say.

The capital equipment price index-which covers paper-making machinery and printing presses-rose 0.2% during September after showing no change throughout most of the past year. But the price index for book publishing was down between August and September, so the latest inflation report was a mixed bag for the printing industry.

The intermediate goods/supplies price index rose 0.7% during September after no net change over the previous two months. The crude goods index surged 5.3% during the latest month following declines in both July and August. As a result, there's still plenty of inflationary pressure in the product pipeline. Between September 1999 and September 2000, the overall PPI moved up 3.3%, making it unlikely that we'll see much moderation in this inflation trend before Q1 2001.