HomeContributorsFundamental AnalysisUS: Producer Prices Show Strengthening Inflation

US: Producer Prices Show Strengthening Inflation

By Wells Fargo Securities

Dec 12 17, 14:45 GMT

The Producer Price Index (PPI) for final demand rose 0.4 percent in November as energy prices moved up again. Ex-food, energy and trade services, however, the PPI also points to inflation picking up.

Broad Gains in Producer Prices

Producer prices rose more than expected in November with the index rising 0.4 percent for a third straight month. The PPI for final demand is now up more than 3 percent over the past year.
Goods prices led the charge. While energy prices increased 4.6 percent, food and core goods prices both rose 0.3 percent.
The services index was up 0.2 percent despite a pullback in the trade services component, which is measured as margins.

Core Strength

Excluding food, energy and trade services, the PPI also rose 0.4 percent. Over the year, the "core-core" improved to 2.4 percent.
Since methodology changes in 2014, the PPI has diverged more noticeably from the more closely watched CPI and PCE measures. Nevertheless, the pickup over the year will be welcomed by the Fed as an indication that inflation is gradually moving up.

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