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Craig Howell, William Thomas, Roger Burns, and Jaclyn Shend
P rices received by domestic producers turned down broadly in 1991, after registering substantial advances a year earlier. The Producer Price Index (PPI) for Finished Goods-a measure of changes in selling prices charged by domestic producers of items such as meats, gasoline, apparel, and trucks-edged down 0.1 percent form December 1990 to December 1991, following an increase of 5.7 percent in the preceding year. Similarly, the Intermediate Goods Price Index-which focuses on price movements for items such as animal feeds, diesel fuel, yarns, and motor vehicle parts-moved down 2.6 percent in 1991 after a 4.3-percent rise the year before. Even more dramatic was the turnabout in the index for Crude materials for Further Processing-a category encompassing such basic items as grains, crude oil, raw cotton, and ores-which switched from a climb of 6.0 percent in 1990 to a slump of 11.6 percent a year later. (See table 1.)
A dramatic reversal in energy prices accounted for most of the differences between 1990 and 1991 movements for each of the three major stage-of-processing categories. However, many other kinds of goods also contributed a share.
Among finished goods, the index for energy swung from an upward surge of 30.7 percent in 1990 to a drop of 9.6 percent in 1991. Consumer food prices also turned down, declining 1.6 percent, after rising 2.6 percent in 1991. The index for finished goods other than foods and energy, sometimes referred to as the "core" or "underlying" rate of inflation, slowed from a climb of 3.5 percent in 1990 to 3.1 percent; within this category, the increase in capital equipment prices decelerated more than did the advance for consumer goods.
This excerpt is from an article published in the May 1992 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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