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Producer Prices: Good Ease, Hints of Deceleration After Record

January 13, 2022
Bottom Line:  Producer prices rose less than expected as goods prices fell for the first time since April 2020. While still a record year-on-year increase, the report offered hints of decelerating inflation pressure. Final demand services were up 0.5% after November's upwardly revised 1.1% reading, led once again by upward pressure on margins in the trade services sector. But excluding that volatile sector, services were up just 0.2%. Auto-related retailing also saw downward margin pressure after more than a year of increases. Overall, producer prices pressures remain historic, but the December report offered hints of a respite as goods price pressures eased and margin growth in many services sectors slowed.
The PPI ROSE by 0.2% in December, compared with market expectations for an increase of 0.4%.  Overall producer prices are 9.8% ABOVE the year-ago level.
The Goods
PPI FELL by 0.4% in December but is now 13.6% ABOVE its year-ago level. Food prices fell by 0.6% but are now 12.9% ABOVE their year-ago level.  Meanwhile energy prices fell by 3.3%. but are now 31.9% ABOVE their year-ago level. The Goods PPI less food and energy  ROSE by 0.5% and is now 9.4% ABOVE its year-ago level.
The Services
PPI ROSE by 0.5% in December and is now 7.9% ABOVE its year-ago level.
The Core PPI ROSE by 0.5%, compared with market expectations for a increase of 0.5%.  Core producer prices are now 8.3% ABOVE their year-ago level.