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Producer Prices:  Trend Creeps Higher as Energy Impact Now Flat

December 14, 2016
Bottom Line: Producer inflation jumped in November, more than expected. Energy prices continue to drive the headline, dropping just 0.3%, less of a decline than expected after jumping 2.5% in October. Final demand services rose modestly. Core prices rose moderately, more than expected, and are now climbing moderately on a year-over-year basis. Overall inflationary pressures at the producer level continue to remain subdued but are ticking modestly higher as the transitory impact of energy prices works through the data. A drag on PPI for the last year, the impact from oil is now nearly flat and will begin to have a positive impact in the coming months .

The PPI ROSE by 0.4% in November, compared with market expectations for an increase of 0.1%. Overall producer prices are 1.2% ABOVE the year ago level.

The Goods PPI ROSE by 0.2% in November and is now 0.6% ABOVE its year ago level. Food prices rose by 0.6% but are now 2.6% BELOW their year ago level. Meanwhile energy prices fell by 0.3%. but are now 0.2% BELOW their year ago level. The Goods PPI less food and energy ROSE by 0.2%, and is now 1.5% ABOVE its year ago level.

The Services PPI ROSE by 0.5% in November and is now 1.6% ABOVE its year ago level.

The Core PPI ROSE by 0.4%, 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 1.5% ABOVE their year ago level.