The 2020 Mid-Year Economic Update_long

Wholesale Inflation Jumps 5.4% in 2005

The capital equipment index advanced 1.3 percent in 2005, after climbing 2.4 percent in 2004. In December, the capital equipment index advanced 0.1 percent after a similar decline in November. The indexes for metal-cutting machine tools and for mining machinery and equipment turned down in December. Prices for agricultural machinery and equipment, as well as for tools, dies, jigs, fixtures and industrial molds, also went down in December.

For more details on December and 2005 wholesale inflation, go to the U.S. Bureau of Labor Statistics Producer Price Index.

Thanks to a jump in gasoline prices, inflation of wholesale goods jumped 0.9 percent in December, the U.S. Bureau of Labor Statistics reported. For 2005, wholesale prices rose 5.4 percent, up from a 4.1 percent increase in 2004.

The pace of inflation in 2005 was fastest since 1990 when Iraq invaded Kuwait, but core prices remained contained. Core inflation, excluding energy and food, was up just 1.7 percent in 2005 and 0.1 percent in December.

Inflation rates for December and all of 2005 in key areas:

Finished Energy Goods: Up 23.9% in 2005
The index for finished energy goods jumped 3.1 percent in December, according to the BLS, following a 4 percent decline in November. Most of this upturn can be attributed to gasoline prices, which spiked 12.3 percent in December after falling 10.7 percent a month earlier. The indexes for liquefied petroleum gas and diesel oil also increased.

Crude Energy Materials: Up 44.8%
The crude energy materials index surged 44.8 percent in 2005, after seeing a 35.9 percent climb in 2004. The index for natural gas fell 11.4 percent in December after decreasing 1.3 percent in November. Prices for crude petroleum gained 7.9 percent (-11.4% in Nov.). The index for coal showed no change.

Construction Materials/Components: Up 6.1%
During 2005, prices for materials and components for construction climbed 6.1 percent, following a 10.1 percent increase in 2004. In December, the index for materials and components for construction moved up 0.6 percent after rising 1.0 percent in November. Prices for plastic construction products increased 1.4 percent (+8% in Nov.); indexes for concrete and architectural paint coatings turned down, and prices for wiring devices, steel mill products, and asphalt felts and coatings increased less in December than in the previous month. The plywood index edged down 0.2 percent following a 15 percent drop in November. Prices for building paper and board, softwood lumber, and air conditioning and refrigeration equipment were up in December.

Basic Industrial Materials: Up 4.8%
The index for basic industrial materials advanced 4.8 percent in 2005, after rising 20.5 percent in 2004. The index showed now change in December after increasing 5.4 percent in November. Prices for iron and steel scrap went down 4.4 percent (+18% in Nov.). Indexes for copper base scrap; hardwood and softwood logs, bolts and timbers; hides and skins; and phosphates also turned down in December. The rates of increase for aluminum base scrap quickened from November to December.

Nondurable Manufacturing: Up 7.5%
The index for materials for nondurable manufacturing climbed 7.5 percent in 2005, following a 13.7 percent gain in 2004. In December, the index inched down 0.1 percent, after falling 0.9 percent in November. Prices for basic organic chemical were down 1.9 percent (-10.3% in Nov.); ethanol was down less in December than November; medicinal and botanical chemicals and wood pulp were up after being down in November; plastic resins and materials fell 1.2 percent (+2.4% in Nov.); paperboard and gray fabrics turned down after rising in November; nitrogenates rose less in December than in November.

Durable Manufacturing: Up 6.1%
Prices for materials for durable manufacturing climbed 6.1 percent in 2005, compared with an 18.3 percent jump in 2004. In December, prices advanced 1.6 percent, the same as in November. The indexes for primary nonferrous materials; aluminum mill shapes; hot rolled steel bars, plates and structural shapes; hot rolled steel sheet and strip; and copper and brass mill shapes moved up in December. These increases offset falling prices for cold rolled steel sheet and strip, semifinished steel mill products, plywood, and unprocessed filament yarns.

Capital Equipment: Up

About the Author
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

By subscribing, you are agreeing to MDM’s Privacy Policy.


articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events


articles left

This is your last free article

Subscribe to MDM Premium today and get:

  • Unlimited access to
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events



You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.