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Producer Prices: 2.4% Core, Some Hurricane Impact

November 14, 2017
Bottom Line: Final demand services rose 0.5 percent in October driving the higher than expected headline and core PPI. Three-quarters of the October advance can be traced to a 1.1-percent rise in margins for final demand trade services. That is, as fuel prices rose in areas impacted by the hurricanes, so too did the margins of fuel-related service providers. While October's surprise may reverse, on a trend basis the final demand PPI has been rising and bears watching in coming months.

The PPI ROSE by 0.4% in October, compared with market expectations for an increase of 0.1%. Overall producer prices are 2.7% ABOVE the year ago level.

The Goods PPI ROSE by 0.3% in October and is now 3.3% ABOVE its year ago level. Food prices rose by 0.5% and are now 2.6% ABOVE their year ago level. Meanwhile energy prices were unchanged but are now 7.6% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.3%, and is now 2.4% ABOVE its year ago level.

The Services PPI ROSE by 0.5% in October and is now 2.5% 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 2.4% ABOVE their year ago level.