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July 2006, Vol. 129, No.7
Price highlights 2005: higher energy prices again dominate producer prices
Joseph Kowal, Antonio Lombardozzi, William Snyders, and Jonathan Weinhagen
The producer price indexes for finished, intermediate, and crude goods all rose in 2005. The finished goods index, which tracks the change in prices for completed products ready to be sold for final use, advanced 5.4 percent after rising 4.2 percent in 2004. (See table 1.) The 2005 advance marked the largest year-to-year increase for finished goods prices since 1990. The index for intermediate goods, which reflects the change in prices for partially processed goods and supplies consumed in the production process, increased 8.6 percent in 2005 following a 9.2-percent advance in 2004. The crude materials index, which measures the change in prices for unprocessed goods and raw materials, rose 21.1 percent in 2005 after advancing 17.4 percent a year earlier.
Energy prices were pushed significantly higher by worldwide economic expansion, geopolitical unrest in the Middle East, and the crippling effects of two devastating hurricanes along the Gulf Coast of the United States. The indexes for finished, intermediate, and crude energy goods increased 23.9 percent, 26.2 percent, and 42.2 percent, respectively. The stage-of-processing indexes for goods other than energy and food, known as the core indexes, registered smaller increases in 2005 than they had in 2004: 1.4 percent for finished goods, 4.8 percent for intermediate goods, and 5.2 percent for crude goods. Lower prices for pork, chicken, and dairy products limited increases in the indexes for food at all three stages of processing, resulting in advances of 1.7 percent for finished consumer foods, 2.4 percent for intermediate foods and feeds, and 1.6 percent for crude foodstuffs and feedstuffs.
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