Producer Prices: Trending Lower Ahead of Shutdowns
April 9, 2020
Bottom Line: Energy prices drove the final demand component of producer prices lower in March. The BLS noted that this price survey was conducted on March 10th and that survey response rates were in-line with those in February. Most of the decline in prices was before the shutdowns for the novel coronavirus. On a trend basis, producer prices were already decelerating modestly, even falling in the case of energy-related inputs prior to the virus shutdowns. While the prices of certain goods spiked amid the shutdowns, the aggregate prices in the pipeline likely continued to fall. The PPI FELL by 0.2% in March, compared with market expectations for a decline of 0.4%. Overall producer prices are 0.7% ABOVE the year-ago level. The Goods PPI FELL by 1.0% in March but is now 1.2% BELOW its year-ago level. Food prices were unchanged by 0.0% but are now 0.8% ABOVE their year-ago level. Meanwhile, energy prices fell by 6.7%. but are now 10.5% BELOW their year-ago level. The Goods PPI less food and energy ROSE by 0.2%, and is now 0.6% ABOVE its year-ago level. The Services PPI ROSE by 0.2% in March and is now 1.5% ABOVE its year-ago level. The Core PPI ROSE by 0.2%, compared with market expectations for unchanged Core producer prices are now 1.4% ABOVE their year-ago level.
Article by Contingent Macro Advisors