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Producer Prices: Core up to 2%, But Still A Touch Below Expectations

September 13, 2017
Bottom Line: Producer inflation rebounded in August. This compared to expectations for a modestly higher rebound at both the headline and core level. Energy prices continued to drive the headline, rebounding 3.3% after slipping June and July. Core prices rose just slightly and have now averaged just 0.4% annualized growth over the last 3 months, compared to 2.2% over the last 6 months and 2.0% over the last 12 months. Overall inflationary pressures at the producer level remain subdued.

The PPI ROSE by 0.2% in August, compared with market expectations for an increase of 0.3%. 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 2.4% ABOVE the year ago level.

The Goods PPI ROSE by 0.5% in August and is now 3.1% ABOVE its year ago level. Food prices fell by 1.3% but are now 1.8% ABOVE their year ago level. Meanwhile energy prices rose by 3.3%. and are now 8.6% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.2%, and is now 2.0% ABOVE its year ago level.

The Services PPI ROSE by 0.1% in August and is now 2.0% ABOVE its year ago level.

The Core PPI ROSE by 0.1%, compared with market expectations for a increase of 0.2%. Core producer prices are now 2.0% ABOVE their year ago level.