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Producer Prices: Modestly Higher

February 13, 2017
Bottom Line: Producer inflation jumped in January. Energy prices continue to drive the headline, rising 4.7% after jumping 1.8% in December, while final demand services rose slightly. The "Finished Goods PPI", formerly headline PPI, is now 3.2% higher than a year ago. Core prices rose moderately, more than expected, but decelerated moderately on a year-over-year basis. Overall inflationary pressures at the producer level continue to be impacted by base effects from energy (oil prices bottomed almost exactly a year ago) but remain modest at the core level.

The PPI ROSE by 0.6% in January, 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 moving higher as oil prices bottomed roughly a year ago. Overall producer prices are 1.7% ABOVE the year ago level.

The Goods PPI ROSE by 1.0% in January and is now 3.2% ABOVE its year ago level. Food prices were unchanged by 0.0% but are now 2.2% BELOW their year ago level. Meanwhile energy prices rose by 4.7% and are now 14.5% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.4%, and is now 2.0% ABOVE its year ago level.

The Services PPI ROSE by 0.3% in January and is now 0.9% ABOVE its year ago level.

The Core PPI ROSE by 0.4%, compared with market expectations for a increase of 0.2%. Core producer prices are now 1.2% ABOVE their year ago level.