Meat Industry INSIGHTS Newsletter

980829 Producer Prices Rise

August 14, 1998

Washington - Prices charged by producers such as factories and food-processing plants rose a moderate 0.2% in July, propelled in part by a drought-induced jump in vegetable prices. Though modest, the overall seasonally adjusted increase in the department's Producer Price Index for finished goods, reported, was more than analysts were expecting. Nevertheless, it followed a 0.1% decline in June and, for the first seven months of the year, the index fell at a 0.3% annual rate. Deflation in goods prices, stemming in part from the falling cost of imports from economically troubled Asia-is helping to keep a lid on inflation. Service costs-not measured in the report-are rising faster, reflecting labor shortages. In July, food prices rose a brisk 0.4%. Vegetable prices jumped 21.3%, the largest rise in 16 months. The cost of tomatoes surged 130% and green-pepper and eggplant costs each rose more than 80%. However, meat prices fell. Beef edged 0.1% lower and pork plummeted 10.9%, the largest drop in 22 years.

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