U.S. Producer Prices Unexpectedly Strengthen in January

The Producer Price Index for final demand rose 0.3% (0.9% y/y) in January after easing 0.1% in December and rising 0.1% in November, according to the Bureau of Labor Statistics. A 0.1% increase had been expected in the Action Economics Forecast Survey. Producer prices excluding food & energy rose 0.5 % (2.0% y/y) in January after easing 0.1% in December. A 0.2% increase had been expected. Another core price measure, producer prices less food, energy & trade services strengthened 0.6% (2.6% y/y) in January after increasing 0.2% in December and 0.1% in November.

Energy prices declined 1.7% (-9.8% y/y), off for the fourth straight month. Gasoline prices were off 3.6% (-13.1% y/y) while home heating oil prices rose 1.8% (-19.5% y/y). Residential natural gas prices increased 1.0% (-17.7% y/y) and the cost of electric power fell 1.2% (+2.5% y/y).

Food prices fell 0.3% (-3.6% y/y) in January after declining 0.7% in December. Fruit & melon prices rose 3.7% (-0.8% y/y) while vegetable prices jumped 9.6% (-19.6% y/y). Egg prices surged 14.6% (-49.5% y/y). Beef & veal prices fell 4.4% (+9.7% y/y) while grain prices were off 5.4% (-32.0% y/y).

The PPI for final demand goods less food & energy rose 0.3% (1.6% y/y) in January after edging 0.1% higher in December. Prices for final demand finished goods less food & energy improved 0.4% (2.4% y/y) in January after holding steady in December. Finished consumer goods prices less food & energy improved 0.2% (2.1% y/y) in January after a 0.1% rise in December, while core nondurable consumer goods prices rose 0.3% (3.0% y/y) and durable consumer goods prices improved 0.2% (0.8% y/y). Prices for private capital equipment increased 0.6% (2.6% y/y) last month while prices for government purchased goods excluding foods & energy rose 0.5% (1.5% y/y).

Prices for final demand services strengthened 0.6% (2.2% y/y) in January after easing 0.1% in December. It was the strongest increase in six months and improved from a 0.1% December decline. Trade services prices gained 0.2% (-0.2% y/y) last month after a 1.0% December decline. Prices of transportation & warehousing fell 0.4% (-4.3% y/y) last month, the third straight monthly decline, while services prices less trade, transportation & warehousing rose 0.8% (4.1% y/y) after rising 0.3% in December.

Final demand construction costs improved 0.3% (-1.0% y/y) in January after a 0.1% December uptick. Construction prices for private capital investment improved 0.3% (-1.1% y/y) and construction prices for government rose 0.4% (-0.7% y/y) last month.

Prices for intermediate demand processed goods fell 0.2% (-3.8% y/y) in January, the fourth straight monthly fall. Intermediate demand processed fuel & lubricant costs weakened 2. 2% (-0.4% y/y).

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.