Another Jump in U.S. Producer Prices in February
by:Sandy Batten
|in:Economy in Brief
Summary
- Headline producer prices jumped a much larger-than-expected 0.6% m/m.
- Goods prices soared 1.2% m/m with energy prices contributing about 70% of the increase.
- The core index increased 0.4% m/m, also much larger than expected.
The Producer Price Index for final demand rose 0.6% m/m (1.6% y/y) in February following a 0.3% m/m (1.0% y/y) increase in January, according to the Bureau of Labor Statistics. A 0.3% increase had been expected in the Action Economics Forecast Survey. This was the second consecutive month in which the rise in the headline index has markedly exceeded expectations. The core measure (excluding food, energy and trade services) increased 0.4% m/m (2.8% y/y), also significantly above expectations of 0.2% m/m, following a 0.6% m/m gain in January. Producer prices excluding food and energy rose 0.3% m/m (2.0% y/y) in February after a 0.5% m/m jump in January.
Nearly 2/3 of the increase in final demand prices can be attributed to a 1.2% m/m increase in the price of goods, the largest monthly rise since August 2023. And about 70% of this increase was due to a 4.4% m/m increase in the price of final demand energy (including a 6.8% m/m surge in the price of gasoline). Food prices rose 1.0% m/m, their largest monthly gain since November 2022, reflecting increases in prices of eggs, beef and veal. Prices for final goods excluding food and energy rose 0.3% m/m in February, the same gain as in January.
Prices for final demand services increased 0.3% m/m (2.3% y/y) following a 0.5% m/m rise in January. Leading the February increase, the index for final demand services less trade, transportation, and warehousing advanced 0.5% m/m. Prices for final demand transportation and warehousing services rose 0.9% m/m. In contrast, margins for final demand trade services declined 0.3% m/m. (Trade indexes measure changes in margins received by wholesalers and retailers.) About a quarter of the rise in prices of final demand services can be attributed to a 3.8% m/m increase in the prices of travel accommodation services.
Prices for intermediate demand processed goods jumped 1.6% m/m (-1.8% y/y) in February, the first monthly increase in five months. Three-fourths of the broad-based increase in February can be traced to prices for processed energy goods, which jumped 6.2% m/m. The index for unprocessed goods increased 1.2% m/m and prices for services edged up 0.1% m/m.
The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s USECON database. Further detail is contained in PPI and PPIR. The expectations figures are available in the AS1REPNA database.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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