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Producer Prices: Core Pressures Ease Just a Touch

June 14, 2022
Bottom Line:  Producer prices rose sharply again in May, led by final demand goods for the fifth consecutive month, as energy prices rose sharply. Truck transportation prices led a more modest increase at the core level, where PPI excluding energy and food was up 0.47% in May and revised lower for April to just 0.2%. While core PPI is still running hot at 7.5% and 8.4% annualized over the last three and six months, respectively, the April and May readings offer a hint of deceleration. Overall, price pressures at the producer level remained significant. Year-on-year readings have likely peaked for at least the next quarter, but it is too early to call a shift in the core price trends as we have seen two-month slowdowns like this before (August and September of last year saw similar readings to April and May and then core PPI re-accelerated sharply over the next six months).
The PPI ROSE by 0.8% in May, compared with market expectations for an increase of 0.8%.   Overall producer prices are 10.7% ABOVE the year-ago level.
The Goods PPI ROSE by 1.4% in May and is now 16.4% ABOVE its year-ago level. Food prices fell by 0.0% but are now 13.3% ABOVE their year-ago level.  Meanwhile, energy prices rose by 5.0%. and are now 44.6% ABOVE their year-ago level. The Goods PPI less food and energy  ROSE by 0.7%,  and is now 9.7% ABOVE its year-ago level.

The Services
PPI ROSE by 0.4% in May and is now 7.6% ABOVE its year-ago level.
The Core PPI
ROSE by 0.5%, compared with market expectations for an increase of 0.6%.  Core producer prices are now 8.3% ABOVE their year-ago level.
Article by Contingent Macro Advisors