It seems that the answer to that one appears to be whichever one shows a lower rate of inflation. The headline in USA Today for the story on the June producer price index was "Falling Gas Costs Send Wholesale Prices Down." In the same vein, the NYT article was headlined "U.S. Overall Producer Prices Fall in June." The underlying story here is that the overall finished goods index fell by 0.2 percent in June, but the core index rose by 0.3 percent. Last month, the story was reversed, with the overall index showing a sharp 0.9 percent rise, but the core index rising by a more modest 0.2 percent. The NYT did headline the overall index, "Gasoline Pushed Up Producer Prices in May," but the very first sentence pointed out the modest core increase: "A double-digit jump in the price of gasoline pushed inflation at the wholesale level up in May, but tame increases for most other goods suggested that price increases were largely contained and businesses would not react by raising prices." The core index did not appear until the 4th paragraph of both the NYT and USA Today article time around. For the record, I always look at both measures. The non-core elements are costs to businesses and consumers, so they can't just be dismissed, especially if there is reason to believe that changes are not just random fluctuations, but instead part of a longer trend. But the non-core components are more erratic, so it is important not to be misled by short-term movements.
--Dean Baker
