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Producer Prices:  Core Prices Fall, Trend Rising Only Modestly

November 16, 2016
Bottom Line: Producer inflation was unchanged in October. Energy prices continue to drive the headline, rising 2.5% after jumping 2.5% in September. while final demand services fell slightly. Core prices fell modestly. This compared to expectations for a modest rise and was little changed on a year-over-year basis. Overall inflationary pressures at the producer level continue to remain subdued.

The PPI was UNCHANGED in October, compared with market expectations for an increase of 0.3%. Year-over-year producer inflation peaked in June 2011 at 4.44%. Overall producer prices are now just 0.9% ABOVE the year ago level.

The Goods PPI ROSE by 0.4% in October and is now 0.3% ABOVE its year ago level. Food prices fell by 0.8% but are now 3.5% BELOW their year ago level. Meanwhile energy prices rose by 2.5%. and are now 0.2% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.1%, and is now 1.3% ABOVE its year ago level.

The Services PPI FELL by 0.3% in October but is now 1.2% ABOVE its year ago level.

The Core PPI FELL by 0.2%, compared with market expectations for a increase of 0.2%. Year-over-year core producer inflation has retreated modestly since December 2014. Core producer prices are now 1.2% ABOVE their year ago level.