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Producer Prices: Core Just Below 2%

July 13, 2017
Bottom Line: Producer price inflation was a touch higher than expected, but on a trend basis price pressures continued to moderate in June. Headline PPI is now running at 2.5% over the last three months, compared with 2.7% over the last 6 months and only 2.0% over the last 12 months as base effects from oil that buoyed year-on-year comparisons come out of calculations. The goods component is now flat over the last three months. Finally, core PPI still accelerated modestly in the last three months but year-over-year growth (now 1.9%) still remains below the pace seen in 2014 and 2015.

The PPI ROSE by 0.1% in June, compared with market expectations for unchanged of 0.0%. Year-over-year producer inflation peaked in June 2011 at 4.44%, then moved lower with energy prices (bottoming in late '15 / early '16) before rising sharply until early '17 due to base effects). Overall producer prices are 2.0% ABOVE the year ago level.

The Goods PPI ROSE by 0.1% in June and is now 2.2% ABOVE its year ago level. Food prices rose by 0.6% and are now 1.2% ABOVE their year ago level. Meanwhile energy prices fell by 0.5%. but are now 4.3% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.1%, and is now 2.1% ABOVE its year ago level.

The Services PPI ROSE by 0.2% in June and is now 1.9% ABOVE its year ago level.

The Core PPI ROSE by 0.1%, compared with market expectations for a increase of 0.1%. Core producer prices are now 1.9% ABOVE their year ago level.