Long Term Perspective
After a sluggish period in 2001 and 2002, prices of crude materials and intermediate goods (excluding food and energy prices) began to accelerate in 2003 and through mid-2006, reflecting improvement in manufacturing activity but have started to show signs of slowing in late 2006, although monthly weakness is not yet showing up in the quarterly averages.

Short Term Perspective
Excluding food and energy prices, the crude materials index and the intermediate index has slowed notably over the fall of 2006 but still remain too high for the Fed's comfort. While slowing in the U.S. economy has helped to moderate growth somewhat, stronger economic growth overseas has helped support continued strong price gains.