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Producer Prices: Core Holds Below 2%

August 10, 2017
Bottom Line: Producer inflation slipped in July. This compared to expectations for higher prices at both the headline and core level. Energy prices continue to drive the headline, dropping another 0.3% after slipping 0.5% in June. Core prices fell slightly, as well, and decelerated slightly on a year-over-year basis. Overall inflationary pressures at the producer level continue to remain subdued as the modest acceleration seen in late '16 and early '17 has lost momentum.

The PPI FELL by 0.1% in July, compared with market expectations for an increase of 0.1%. 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 FELL by 0.1% in July but is now 2.3% ABOVE its year ago level. Food prices were unchanged by 0.0% but are now 1.9% ABOVE their year ago level. Meanwhile energy prices fell by 0.3%. but are now 4.3% ABOVE their year ago level. The Goods PPI less food and energy FELL by 0.1%, but is now 2.0% ABOVE its year ago level.

The Services PPI FELL by 0.2% in July but is now 1.7% ABOVE its year ago level.

The Core PPI FELL by 0.1%, compared with market expectations for a increase of 0.2%. Core producer prices are now 1.8% ABOVE their year ago level.