PPI Declines First Time Since August 2016

Producer prices unexpectedly declined in December. Trade services fell a steep 0.6 percent.

The BLS reports the Producer Price Index for final demand fell 0.1 percent in December, seasonally adjusted. On an unadjusted basis, the final demand index climbed 2.6 percent in 2017 after a 1.7 percent rise in 2016.

​Goods Highlights

  • ​Prices for final demand goods were unchanged in December following a 1.0 percent increase in November.
  • ​The index for final demand less foods and energy advanced 0.2 percent.
  • ​Prices for final demand foods declined 0.7 percent.
  • ​The index for final demand energy was unchanged.​

Services Highlights

  • ​The index for final demand services moved down 0.2 percent in December following nine consecutive increases. Most of the decrease can be traced to a 0.6-percent decline in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.)​
  • Prices for final demand transportation and warehousing services fell 0.4 percent.
  • ​The index for final demand services less trade, transportation, and warehousing rose 0.1 percent.

The price of crude is about 11% higher than it was a year ago. The PPI for final demand is only up 2.6% from a year ago.

Tomorrow's CPI report rates to be weak.

Mike "Mish" Shedlock

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