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Producer Prices: Modestly Higher Again

March 14, 2017
Bottom Line: Producer inflation rose in February. The "Finished Goods PPI", formerly headline PPI, is now 3.9% 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 oil (oil prices bottomed almost exactly a year ago) but remain modest at the core level.

The PPI ROSE by 0.3% in February, compared with market expectations for an increase of 0.1%. 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 2.2% ABOVE the year ago level.

The Goods PPI ROSE by 0.3% in February and is now 4.0% ABOVE its year ago level. Food prices rose by 0.3% but are now 1.8% BELOW their year ago level. Meanwhile energy prices rose by 0.6%. and are now 19.8% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.1%, and is now 2.0% ABOVE its year ago level.

The Services PPI ROSE by 0.4% in February and is now 1.3% ABOVE its year ago level.

The Core PPI ROSE by 0.3%, compared with market expectations for a increase of 0.2%. Core producer prices are now 1.5% ABOVE their year ago level.