Producer Prices: Core PPI Finishes 2016 sub-2%, Above '15, But Still Below '14
January 13, 2017
Bottom Line: Producer inflation rose again in December. Energy prices continue to drive the headline, rising 2.6% after slipping 0.3% in November, while final demand services rose only slightly. Core prices rose modestly, slightly more than expected, ending 2016 up 1.6% versus 0.4% in 2015 and 2.1% in 2014. Overall inflationary pressures at the producer level continue to remain subdued.
The PPI ROSE by 0.3% in December, compared with market expectations for an increase of 0.3%. Year-over-year producer inflation peaked in June 2011 at 4.44%, then fell due to energy price declines and is now slowly moving back into positive territory. Overall producer prices are 1.6% ABOVE the year ago level.
The Goods PPI ROSE by 0.7% in December and is now 2.0% ABOVE its year ago level. Food prices rose by 0.7% but are now 1.1% BELOW their year ago level.
Meanwhile energy prices rose by 2.6%. and are now 6.1% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.3%, and is now 1.7% ABOVE its year ago level.
The Services PPI ROSE by 0.1% in December and is now 1.4% ABOVE its year ago level.
The Core PPI ROSE 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 1.6% ABOVE their year ago level.
Article by Contingent Macro Advisors