Raw materials costs made slight gains despite PPI changing little in July

Raw material costs slightly increased while intermediate and finished products remained relatively the same, according to the Bureau of Labor Statistics. Manufacturing costs for U.S. trade industries saw little change in July compared to the previous month. The Producer Price Index for net output reveals that core wholesale prices increased 0.1 percent in July, a change of 2.1 percent from 2012. Economists had projected that the figure would be marginally higher at 0.2 percent,Bloomberg reported.

After the Producer Price Index for June showed a 0.5 percent decrease, prices were flat in July for finished, intermediate and crude goods, supplies and components.

Prices of finished goods combining food and energy were boosted by prices in the pharmaceutical industry, which increased 1 percent. Finished energy data reports that prices were slightly down 0.2 percent in July after residential natural gas prices decreased.

"Inflation should gradually pick up, but it's still going to be relatively low," Chief Economist for Raymond James & Associates Scott Brown said. "There's still a lot of slack in the economy."

The biggest change in the PPI was for energy prices for crude goods, which surged 4 percent from June, a 9.3 percent increase compared year-to-year.

Raw materials costs, including for crude oil, increased 1.2 percent in July. While core crude materials decreased 0.3 percent, raw energy prices increased significantly. The crude core prices declined due to decreases in nonferrous metal and corn costs. Leading the jump in prices were crude petroleum prices which rose 10.6-percent from the previous month. Coal also experienced higher prices, which added to the bump from June.

"Until real demand returns and unless consumption increases, lower input cost will continue to impede pricing power," David Wolfort, president and chief operating officer, said to Bloomberg in a call on Aug. 9.

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