The Producer Price Index for Finished Goods declined 0.6 percent in January, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decrease followed a 0.9-percent advance in December and a 1.8-percent jump in November. At the earlier stages of processing, prices for intermediate goods moved down 0.7 percent compared with a 0.5-percent increase in the prior month. The crude goods index decreased 6.3 percent after rising 2.8 percent in December. (See table A.)
Before we get too excited ---
Energy prices dropped 4.6%. That's because oil prices cratered in mid-January, only to rebound later in the month. We won't see a drop like this unless oil retreats again.
The number ex-food and energy was up .2%. The unadjusted change from a year ago was also up .2%. That's good news.
However -- and Bernanke made this abundantly clear in his Congressional testimony this week -- oil is a big reason for the drop. Remember that oil rebounded from lows in mid-January. In addition, oil is a pretty unstable commodity.