PPI: Energy Prices Decline, Modest Core Inflation

February 17, 2016
Bottom Line: Producer inflation climbed in January. Energy prices fell by 5.0% after declining by 3.5% in December while food prices rose modestly. Final demand services rose modestly. Core prices also rose, more than expected and climbed modestly on a year-over-year basis. Overall inflationary pressures at the producer level still remain subdued. The PPI ROSE by 0.1% in January, compared with market expectations for a decline of 0.2%. 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 0.3% BELOW the year ago level. The Goods PPI FELL by 0.7% in January and is now 2.6% BELOW its year ago level. Food prices rose by 1.0% but are still 3.5% BELOW their year ago level. Meanwhile energy prices fell by 5.0% and are now 11.7% BELOW their year ago level. The Goods PPI less food and energy were UNCHANGED. The Services PPI ROSE by 0.5% in January and is now 0.9% ABOVE its year ago level. The Core PPI ROSE by 0.4%, compared with market expectations for an increase of 0.1%. Year-over-year core producer inflation has retreated modestly since December 2014. Core producer prices are now 0.7% ABOVE their year ago level.
Article by contingentmacro