PPI: Energy Prices Decline, Core Inflation Unchanged

March 15, 2016
Bottom Line: Producer inflation slipped in February, in line with market expectations. Energy prices continue to drive the headline, dropping 3.4% after plunging 5.0% in January. Meanwhile final demand services were unchanged. Core prices were also unchanged, less than expectations for a slight increase, and climbed modestly on a year-over-year basis. Overall inflationary pressures at the producer level remain subdued. The PPI FELL by 0.2% in February, compared with market expectations for a decline of 0.2%. Year-over-year producer inflation peaked in June 2011 at 4.44%. Slowing since then has been because of lower energy prices, where the pace of declines accelerated sharply last year. Overall producer prices are unchanged compared to the year ago level. The Goods PPI FELL by 0.6% in February and is now 2.8% BELOW its year ago level. Food prices fell by 0.3% but are now 2.5% BELOW their year ago level. Meanwhile energy prices declined by 3.4% and are now 14.7% BELOW their year ago level. The Goods PPI less food and energy ROSE by 0.1% and is now 0.2% ABOVE its year ago level. The Services PPI were UNCHANGED in February and is now 1.5% ABOVE its year ago level. The Core PPI was UNCHANGED, compared with market expectations for an increase of 0.1%. Year-over-year core producer inflation has retreated modestly since December 2014. Core producer prices are now 1.1% ABOVE their year ago level.
Article by contingentmacro