U.S. Producer Prices Unexpectedly Dip in December
Summary
- December PPI 0.1% m/m easing (+1.0% y/y) reflects drops of 1.2% in energy prices and 0.9% in food costs.
- PPI ex foods & energy as well as services prices hold steady for the third straight month.
- Core goods prices are unchanged after a 0.1% November uptick.
The Producer Price Index for final demand slipped 0.1% m/m in December after declines of 0.1% in November (0.0% initially) and 0.4% in October, according to the Bureau of Labor Statistics. The December reading was the third consecutive m/m decrease following four successive m/m rises. The year-over-year rate accelerated to 1.0% in December after decelerating to 0.8% in November. A 0.2% m/m increase had been expected in the Action Economics Forecast Survey. The December PPI numbers were lower than the December CPI released yesterday (0.3% m/m; 3.4% y/y), generally supporting the view that U.S. inflation from both producer and consumer sides is easing.
Producer prices excluding food & energy were unchanged (1.8% y/y) in December after holding steady in both November (unrevised) and October. A 0.2% m/m increase had been expected. Another core price measure, producer prices less food, energy & trade services rose 0.2% (2.5% y/y) in December after increasing 0.1% in both November (unrevised) and October, posting the seventh straight m/m rise.
The December PPI m/m easing was led by a 1.2% decrease (-4.8% y/y) in energy prices, the third straight monthly fall, following a 2.4% November decline (-1.2% initially). Prices for diesel fuel (-12.4%; -18.7% y/y), home heating oil (-4.8%; -22.7% y/y), and liquefied petroleum gas (-2.5%; -15.5% y/y) registered the third straight m/m decline in December. Residential natural gas prices fell 0.3% (-9.9% y/y), the fourth m/m fall in five months, after a 3.6% November rise. In contrast, gasoline prices rebounded 2.1% (-5.3% y/y) in December, the first m/m increase since September and residential electric power prices rose 0.6% (4.8% y/y), the fourth consecutive m/m rise.
Food prices fell 0.9% (-5.0% y/y) in December, the second m/m fall in three months, after a 0.7% rise in November (+0.6% initially). Food prices for exports (-1.6%; -10.1% y/y), finished consumer foods (-0.8%; -4.3% y/y), and government purchased foods (-0.7%; +0.7% y/y) all dropped m/m in December.
The PPI for final demand goods less food & energy was unchanged (1.8% y/y) in December after increasing 0.1% in November (+0.2% initially) and holding steady in October. Prices for final demand finished goods less food & energy held steady (2.6% y/y) in December after a 0.2% rise in November. Finished consumer goods prices less food & energy slipped 0.1% (+2.4% y/y) in December after a 0.2% rise in November, with core nondurable consumer goods prices holding steady (3.3% y/y) and durable consumer goods prices down 0.2% (+1.1% y/y). Prices for private capital equipment were unchanged (2.7% y/y) in December after rising 0.2% in November, while prices for government purchased goods excluding foods & energy held steady (0.6% y/y) for the second successive month.
Prices for final demand services were unchanged (1.8% y/y) for the third straight month in December following six consecutive m/m increases. Trade services prices slid 0.8% (-0.8% y/y) in December, the fourth successive m/m slide. Services prices of transportation & warehousing fell 0.4% (-4.5% y/y) in December following a 0.2% November decline and two straight m/m rises, while services prices less trade, transportation & warehousing rose 0.4% (3.8% y/y), the sixth m/m rise in seven months.
Prices for final demand construction inched up 0.1% (0.5% y/y) in December, the first m/m increase since September, after a 0.1% downtick in November. Following two consecutive m/m declines, construction prices for private capital investment edged up 0.1% (0.5% y/y) and construction prices for government held steady (0.6% y/y) in December.
Meanwhile, prices for intermediate demand processed goods fell 0.6% (-2.7% y/y) in December, the third straight m/m fall, on top of a 0.4% decline in November, led by a 3.8% decrease (-7.9% y/y) in intermediate demand processed fuel & lubricant costs.
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.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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