U.S. producer inflation continued to moderate in May on a year-over-year basis, total PPI was up 1.1% year-over-year, versus 2.3% in April. Rising the least since December 2020. Excluding food and energy, PPI was up 2.8% year-over-year, versus 3.2% in April. Producer Price Index for final demand declined 0.3% month-over-month in May (consensus -0.1%) while the index for final demand, less foods and energy (core PPI) increased 0.2% month-over-month, as expected. Wholesale inflation is moving lower, which should be pleasing to the Fed and a reprieve for corporate profit margins.
The release was in line with a moderating Consumer Price Index we saw yesterday. In turn that brings back to the fore the Fed’s monetary policy path with moderation in pipeline measures.
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.
May 2023 PPI
US PPI Highlights.
- US PPI Final Demand (M/M) May: -0.3% (est -0.1%; prev 0.2%)
- US PPI Ex Food And Energy (M/M) May: 0.2% (est 0.2%; prev 0.2%)
- US PPI Final Demand (Y/Y) May: 1.1% (est 1.5%; prev 2.3%)
- US PPI Ex Food And Energy (Y/Y) May: 2.8% (est 2.9%; prev 3.2%)
Annual producer inflation eased for an 11th straight month to to 1.1%, the least since December 2020.
Where the price gains were:
- Services cost edged 0.2% higher, led by margins for automobiles and automobile parts retailing (4.2%).
- Higher prices were seen for fuels and lubricants retailing; apparel, footwear, and accessories retailing; securities brokerage, dealing, investment advice, and related services; machinery and vehicle wholesaling; and food wholesaling.
Where the price losses were:
- Goods prices went down 1.6%, the largest decrease since July 2022, mainly due to a 13.8% drop in gasoline prices and a 1.3% fall in food.
- Costs also went down for diesel fuel, chicken eggs, jet fuel, fresh and dry vegetables, and iron and steel scrap.
US PPI
US Core PPI
US May CPI
PPI was released after consumer price data for May. Annual inflation cooled for the tenth straight month on a year-over-year basis, total CPI was up 4.0%, its lowest level since April 2021, below last months, and expected 4.01% per cent. However, core-CPI only dipped slightly to 5.3% year on year, barely moving since the end of last year. The Federal Reserve meets tomorrow and would be relieved from the report. On a monthly basis, the headline CPI index rose 0.1 per cent, versus a 0.4% gain in April. May’s decline was driven by gasoline prices. core-CPI, which excludes food and energy, was also up 0.4% month-over-month.
The FOMC meets later today to announce its latest move on interest rates.
Source BLS
From the Traders Community News Desk