The producer price index (PPI) for finished goods fell 0.7% in December, seasonally adjusted, the Bureau of Labor Statistics (BLS) reported, as the finished energy index tumbled 4%. But the “core” PPI, which omits food and energy, edged up 0.1% for the month and 2.2% for the year. While low, that was a notable acceleration from the 1% increase in 2003 and 0.5% decline in 2002. Furthermore, the energy decrease seems sure to be short-lived. Recently the price of crude-oil futures for February delivery closed at $48.04 per barrel, up 18% from its low in December, and natural-gas futures also rose sharply.

Among intermediate goods indexes, the PPI for materials and components for construction rose 0.4% for the month and 10% for the year, compared with 3% in 2003 and 0.8% in 2002. The index had been unchanged in November. BLS commented, “Prices for softwood lumber increased 0.7%, following an 8.0% drop in the prior month. The indexes for plywood, building paper and board, wiring devices, switchgear, fabricated ferrous wire products, heating equipment, and gypsum products also turned up, after falling in November. Prices for nonferrous wire and cable and cement rose more in December than they did in the prior month. By contrast, the index for fabricated structural metal products edged up 0.2%, following a 0.6% gain in November. Price increases also slowed from November to December for concrete products, asphalt felts and coatings, and steel mill products. The index for plastic construction products fell, after rising in the preceding month.” The PPI for crude materials for construction dropped 0.9% in December but wound up the year 4.7% higher. The PPI for construction equipment was flat for the month but rose 6% in 2004.