South By North Strategies, Ltd.

The seasonally-adjusted prices received by producers of finished goods rose by 0.3 percent in October, according to data recently released by the U.S. Bureau of Labor Statistics. That same month, the prices received by sellers of intermediate goods rose slightly (+0.3 percent), and the prices received by sellers of crude goods advanced by 5.4 percent.

At each stage of the production process, price increases were attributable to rises in food and energy prices. When energy and food prices are excluded, producer prices for finished goods actually fell by 0.6 percent in October. Absent energy and food costs, producer prices fell for intermediate goods and rose slightly for crude ones.

Over the past year, producer prices have fallen. Unadjusted prices for finished goods have declined by 1.9 percent, and producer prices for intermediate and crude goods have dropped by 7.5 percent and 14.1 percent, respectively.

The new data offer two insights into the state of the American economy. First, the findings suggest that demand for good and services remains weak, though not quite as weak as in recent months.  Second, the report indicates that inflation is not currently a threat to the larger economy.