Producer Prices: Slightly Higher But Trend Not Accelerating

Bottom Line: While somewhat less meaningful this month given we already got the CPI report, producer prices in February showed continued moderate price gains. Core prices rose modestly, inline with expectations. Due to base effects from low year ago prices in many categories, year-on-year growth appears stronger, especially in the core final demand category. But overall inflationary pressures at the producer level are moderate and with 3-month average gains slower than the 6- and 12-month pace are not showing signs of any meaningful acceleration. The PPI ROSE by 0.2% in February, compared with market expectations for an increase of 0.1%. Overall producer prices are 2.9% ABOVE the year ago level. The Goods PPI FELL by 0.1% in February but is now 3.1% ABOVE its year ago level. Food prices fell by 0.4% but are now 0.6% ABOVE their year ago level. Meanwhile energy prices fell by 0.5%. but are now 9.3% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.2%, and is now 2.1% ABOVE its year ago level. The Services PPI ROSE by 0.3% in February and is now 2.8% ABOVE its year ago level. The Core PPI ROSE by 0.2%, compared with market expectations for a increase of 0.2%. Core producer prices are now 2.6% ABOVE their year ago level.