US Producer Price Inflation Fell More Than Expected in December

US Producer price inflation for December fell -0.5% vs. -0.1% consensus and +0.2% in November (revised from +0.3%). On a year-over-year basis, the index for final demand was +6.2% Y/Y vs. +6.8% expected and +7.3% prior (revised from +7.4%). The release was in line with a softer Consumer Price Index we saw last week. Core PPI rose +0.1% vs. +0.1% expected and +0.2% prior (revised from +0.4%). Core PPI was +5.5% Y/Y vs. +5.7% expected and +6.2% prior (unchanged).

In turn that brings back to the fore the Fed’s monetary policy path. Weaker retail sales were also released again confirming consumer weakness, supporting the belief that inflation pressures continue to ease.

Inflation

The Federal Reserve has been on an aggressive path to reducing historically high U.S. inflation, we are a long way from the Central Bank transitory mantra.

December 2022 PPI

PPI Highlights.

  • US Final Demand (M/M) Dec: -0.5% (est -0.1%; prevR 0.2%)
  • PPI Final Demand (Y/Y) Dec: 6.2% (est 6.8%; prevR 7.3%)
  • PPI Ex Food and Energy (M/M) Dec: 0.1% (est 0.1%; prevR 0.2%)
  • PPI Ex Food and Energy (Y/Y) Dec: 5.5% (est 5.6%; prev 6.2%)

Where the price rises were:

  • The index for final demand goods decreased 1.6% month-over-month, paced by a 7.9% drop in prices for final demand energy.
  • The index for final demand services ticked up 0.1%, led by a 0.3% increase in prices for final demand trade services.
  • Prices for processed goods for intermediate demand fell 2.8% month-over-month, representing the sixth consecutive decline and the sharpest drop since April 2020.
  • Prices for unprocessed goods for intermediate demand increased 3.4% due to a 9.5% increase in prices for unprocessed energy materials.

US PPI

United States Consumer Price Index (CPI)
US PPI Annually
United States Producer Price Inflation MoM
US PPI Monthly

US Core PPI

 

United States Producer Prices Final Demand Less Foods and Energy YoY
US Core PPI Inflation Annually
United States Producer Prices Final Demand Less Foods and Energy MoM
US Core PPI Inflation Monthly

PPI was released after of consumer price data for December. The December CPI report had been overblown, like everything it seems these days. The headline numbers were as expected. The Consumer Price Index declined 0.1% m/m (consensus 0.0%), with a 9.4% m/m decline in the gasoline index, while core CPI, increased 0.3% m/m as expected. On a year-over-year basis, CPI was 6.5% from 7.1% in November. Core CPI was up 5.7% versus 6.0% in November. CPI was lower for a sixth straight month to the lowest since October 2021.

Source BLS

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