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Economy in Brief

U.S. Producer Prices Slip; Core Unchanged
by Tom Moeller  April 13, 2017

The headline Final Demand Producer Price Index eased 0.1% during March after a 0.3% February rise. Nevertheless, the y/y increase of 2.2% was the strongest since March 2012. The monthly decline compared to expectations for no change in the Action Economics Forecast Survey. The PPI excluding food and energy remained unchanged (1.6% y/y) following a 0.3% increase. A 0.2% rise had been expected.

Prices of trade services slipped 0.1% following a 0.4% February rise. An updated measure of "core" PPI inflation, final demand prices excluding food, energy, and trade services prices, notched 0.1% higher (1.7% y/y) following a 0.3% February gain.

Final demand goods prices slipped 0.1% (+4.0% y/y). Final demand energy prices declined 2.9% (+15.2% y/y) as gasoline prices fell 8.3% (+33.5% y/y). Home heating oil prices declined 4.7% (+58.3% y/y), but natural gas prices improved 0.7% (12.3% y/y). Food prices strengthened 0.9% (0.3% y/y). Beef & veal prices rebounded 4.1% (-10.0% y/y), while fruit & melon prices strengthened 7.7% (+5.0% y/y). Egg prices increased 7.6% (-27.8% y/y), but bakery product prices gained 0.2% (-0.3% y/y). Pork prices increased 1.0% (4.3% y/y) and dairy product prices eased 0.6% (+4.8% y/y).

Nondurable consumer goods prices excluding food & energy improved 0.3% (3.3% y/y). The y/y increase has lost momentum since a 4.1% y/y rise in June 2015. Women's apparel prices rose 0.2% y/y and men's apparel costs rose 0.9% y/y. Showing strength, however, were industrial chemical prices, up 13.7% y/y. Finished consumer durable goods prices jumped 0.5% (1.2% y/y), the strongest increase since February 2015. It reflected a 1.3% increase (2.2% y/y) in light motor trucks and a 0.4% rise (1.7% y/y) in passenger cars. Furniture prices gained 0.4% (1.1% y/y). Private capital goods prices recovered 0.3% (0.9% y/y).

Prices of final demand for services eased 0.1% (+1.5% y/y) following two months of strong increase. Trade services prices eased 0.1% (+1.5% y/y) following a 0.4% rise. Prices for transportation of private passengers slipped 0.1% (+1.7% y/y), while transportation & warehousing costs eased 0.2% (1.3% y/y).

Final demand construction costs recovered 0.2% (1.5% y/y) following a 0.1% slip.

Prices of processed goods for intermediate demand improved 0.1%. The 5.3% y/y gain compared to 5.7% price deflation during 2016. It reflected a 4.6% y/y increase in factory materials & components, and a 15.1% y/y increase in processed fuels.

The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

Producer Price Index (SA, %) Mar Feb Jan Mar Y/Y 2016 2015 2014
Final Demand -0.1 0.3 0.6 2.3 0.5 -1.0 1.8
   Excluding Food & Energy 0.0 0.3 0.4 1.6 1.3 0.8 1.8
   Excluding Food, Energy & Trade Services 0.1 0.3 0.2 1.7 1.2 0.6 1.2
   Goods -0.1 0.3 1.0 4.0 -1.5 -4.9 1.4
      Foods 0.9 0.3 0.0 0.3 -3.2 -3.1 3.7
      Energy -2.9 0.6 4.7 15.2 -8.2 -25.6 -3.2
      Goods Excluding Food & Energy 0.4 0.1 0.4 2.3 0.8 0.4 1.6
   Services -0.1 0.4 0.3 1.5 1.5 1.0 1.9
      Trade Services -0.1 0.4 0.9 1.5 1.5 1.4 2.0
   Construction 0.2 -0.1 0.3 1.5 1.3 3.2 1.9
Intermediate Demand - Processed Goods 0.1 0.4 1.1 5.3 -5.7 -14.0 1.1
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