PPI: Energy Prices Decline, Core Inflation Modest

December 11, 2015
The PPI ROSE by 0.3% in November, compared with market expectations for no change. Year-over-year producer inflation peaked in June 2011 at 4.44%. Slowing since then has been because of lower energy prices, where the pace of declines has accelerated sharply over the past year. Overall producer prices are 1.2% BELOW the year ago level. The Goods PPI FELL by 0.1% in November and is now 4.3% BELOW its year ago level. Food prices rose by 0.3% but are still 4.0% BELOW their year ago level. Meanwhile energy prices declined by 0.6% and are 19.1% BELOW their year ago level. The Goods PPI less food and energy index FELL by 0.1%, and is unchanged compared to its year ago level. The Services PPI ROSE by 0.5% in November and is now 0.5% ABOVE its year ago level. The Core PPI ROSE by 0.3%, compared with market expectations for an increase of 0.1%. Year-over-year core producer inflation has retreated modestly since December. Core producer prices are now 0.4% ABOVE their year ago level. Bottom Line: Producer inflation rose in November, more than expectations. Food prices increased while energy prices declined by 0.6%. Moreover, final demand services rose moderately. Core prices also rose, more than expected, and climbed slightly on a year-over-year basis. However, core prices year-over-year are now increasing at their slowest pace in the past 2 years. Overall inflationary pressures at the producer level remain subdued.
Article by contingentmacro