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Producer Prices: Surprise Drop, Core Finishes 2017 at 2.3%

January 11, 2018
Bottom Line: Final demand service prices fell in December after a hurricane-related boost in October and November. The 3-month annualized pace of price gains at the core level is now in-line with that of the last 6- and 12-month averages. While faster than the pace of 2016, and much faster than that of 2015, it suggests that core producer price inflation likely stabilized in the 2-2.3% area in the 2nd half of 2017.

The PPI FELL by 0.1% in December, compared with market expectations for an increase of 0.2%. Overall producer prices are 2.7% ABOVE the year ago level.

The Goods PPI was UNCHANGED in December but is now 3.6% ABOVE its year ago level. Food prices fell by 0.7% but are now 1.9% ABOVE their year ago level. Meanwhile energy prices were unchanged by 0.0%. but are now 10.3% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.2%, and is now 2.3% ABOVE its year ago level.

The Services PPI FELL by 0.2% in December but is now 2.2% 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 2.3% ABOVE their year ago level.