Featured Perspective: May PPI Shows Continuation of Upward Pressure In Food Prices
Press Release -- June 21, 2007 -- The government report on wholesale prices, the Producer Price Index (PPI), is released around the middle of the following month, and reports on the change in a broad range of prices. The latest report (for May) indicates that the PPI for food prices continues to surge, rising 8.5% versus year ago. During the 1st five months of CY07, the PPI of food prices has gained 6.7% (vs. YA).
The government also released the consumer price report for May (CPI), and it appears food prices at the consumer level are beginning to accelerate as well. The CPI-Food in May rose by 3.9% from a year ago, and thus far in 2007 has averaged a 3.3%. By comparison the CPI-Food rose by 2.2% during 2006 and has risen at an annual average rate of 2.9% over the past 6 years.
The chart below shows a comparison of the CPI-Food to the PPI-Food – when the PPI-Food is rising faster than the CPI-Food, this suggests margin pressure and is indicated in red. The underlying pressure in food costs is expected to continue for most of CY2007, with gains in the PPI-Food likely to remain above the CPI-Food.
Contact: Bill Lapp, Advanced Economic Solutions, bill.lapp@cox.net
(c) 2007 Bill Lapp
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