US Producer price inflation for January (PPI) was up 0.7% month-over-month (consensus 0.4%) following an upwardly revised 0.2% decline (from -0.5%) in December. Core-PPI, which excludes food and energy, was up 0.5% month-over-month (consensus 0.3%) following an upwardly revised 0.3% increase (from 0.1%) in December. On a year-over-year basis, PPI was up 6.0%, versus 6.2% in December, and core-PPI was up 5.4%, versus 5.8% in December. The release was in line with a moderating Consumer Price Index we saw last week.
In turn that brings back to the fore the Fed’s monetary policy path. Stronger retail sales were released yesterday confirming consumer resilience, supporting the belief that the economy remains sturdy.
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.
January 2023 PPI
PPI Highlights.
- PPI Final Demand (M/M) Jan: 0.7% (est 0.4%; prevR -0.4%)
- PPI Ex Food and Energy (M/M) Jan: 0.5% (est 0.3%; prev 0.1%)
- PPI Final Demand (Y/Y) Jan: 6.0% (est 5.4%; prev 6.2%)
- PPI Ex Food and Energy (Y/Y) Jan: 5.4% (est 4.9%; prev 5.5%)
Where the price rises were:
- Goods prices jumped 1.2%, also the largest increase since rising 2.1% in June 2022, led by a 6.2% surge in gasoline cost.
- The indexes for residential natural gas, diesel fuel, jet fuel, soft drinks, and motor vehicles also moved higher.
- Services cost edged 0.4% higher, mainly hospital outpatient care (1.4%).
- The indexes for automobiles and automobile parts retailing; health, beauty, and optical goods retailing; portfolio management; chemicals and allied products wholesaling; and airline passenger services also moved higher.
Where the price declines were:
- The indexes for residual fuels and for basic organic chemicals also declined.
- Prices for fresh and dry vegetables decreased 33.5%.
- Margins for fuels and lubricants retailing fell 17.5%.
US PPI
Below is last month – what concerns many is the revisions higher from previous data, questioning its accuracy and relevance for decision making.
Below is last month – what concerns many is the revisions higher from previous data, questioning it’s accuracy and relevance for decision making.
US Core PPI
Below is last month – what concerns many is the revisions higher from previous data, questioning it’s accuracy and relevance for decision making.
Below is last month – what concerns many is the revisions higher from previous data, questioning it’s accuracy and relevance for decision making.
PPI was released after of consumer price data for January. Annual inflation cooled for the seventh straight month to 6.4% in January, however the pace of easing is starting to level off. The prelude to the January CPI report was one of high expectations for the next direction of interest rates and market direction. Fed Swaps showed little change to the expected funds rate in 2023. What we saw m/m was CPI increased 0.5% in January from December, compared with a 0.1% increase the prior month, due in part to rebounding energy and shelter prices. Core CPI rose 5.6% from a year earlier, down from 5.7% in December, Core prices rose 0.4% on the month in January, the same as in December.
Source BLS
From the Traders Community News Desk