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Producer Prices: Surprise Upside As Medical Care Prices Jump

February 15, 2022
Bottom Line:  Producer prices rose sharply more than expected in January, accelerating nearly a percent on the month at the core level versus expectations for 0.4%. Goods prices remained hot, but it was services that surprised the most. Much like in the consumer price report, medical care service prices rose sharply, the first significant break above the trend since the pandemic. Specifically, hospital outpatient services led the increase in PPI's "final demand services" segment. On the goods side, energy prices drove the headline while construction-related materials, especially lumber, led core goods gains. Overall, this report shows only hints of slower pipeline inflation pressures with core goods prices decelerating only slowly, while services inflation begins to tick higher again.
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.
Article by Contingent Macro Advisors