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Economy in Brief

U.S. Producer Prices Fall Sharply; Core Prices Ease
by Tom Moeller  March 12, 2020

The Producer Price Index for final demand declined 0.6% (+1.3% y/y) during February following a 0.5% January rise. It was the largest m/m weakening since January 2015. A 0.1% decline had been expected in the Action Economics Forecast Survey. Producer prices excluding food & energy were off 0.3% (+1.4% y/y) following a 0.5% gain. A 0.1% rise had been expected. The PPI excluding food, beverages and trade services, another measure of underlying price inflation, slipped 0.1% (+1.4% y/y) after rising 0.4% in January. It was the first monthly shortfall in three months.

Final demand goods prices less food & energy eased 0.1% (+0.5% y/y) after a 0.3% rise. The cost of finished consumer goods less food & energy held steady (1.2% y/y) for a second straight month. Core nondurable goods prices edged 0.2% higher (1.9% y/y) and durable product prices eased 0.3%, but were unchanged y/y. Private capital equipment prices also held steady (1.0% y/y) following three straight 0.1% increases.

A 0.3% decline (+1.5% y/y) in services prices for final demand followed a 0.7% increase. Trade services prices fell 0.7% (+1.3% y/y), as the cost of trade of finished goods fell 0.9%. A 0.6% decline in transportation & warehousing prices was the third decline in four months. Excluding these costs, prices eased 0.1% (+1.8% y/y) after improving 0.6%.

Food prices weakened 1.6% (+1.1% y/y) following a 0.2% rise. Final demand energy prices fell 3.6% (+0.2% y/y) as gasoline prices were off 6.5% (+9.8% y/y).

The cost of construction slipped 0.1% (+3.8% y/y) following a 0.8% rise.

Intermediate product prices fell 0.9% (-2.1% y/y) after declining 0.3%.

The PPI data can be found in Haver's USECON database. Further detail can be found in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

Producer Price Index (SA, %) Feb Jan Dec Feb Y/Y 2019 2018 2017
Final Demand -0.6 0.5 0.2 1.3 1.7 2.9 2.3
   Excluding Food & Energy -0.3 0.5 0.1 1.4 2.1 2.6 1.9
   Excluding Food, Energy & Trade Services -0.1 0.4 0.2 1.4 2.0 2.9 2.1
   Goods -0.9 0.1 0.3 0.5 0.4 3.4 3.4
      Foods -1.6 0.2 -0.3 1.1 1.8 0.2 1.2
      Energy -3.6 -0.7 1.5 0.2 -4.4 10.1 10.6
    Goods Excluding Food & Energy -0.1 0.3 0.2 0.5 1.4 2.5 2.2
   Services -0.3 0.7 0.0 1.5 2.2 2.6 1.8
      Trade Services -0.7 1.2 -0.3 1.3 2.5 1.8 1.5
   Construction -0.1 0.8 0.0 3.8 4.9 4.1 2.2
Intermediate Demand - Processed Goods -0.9 -0.3 0.1 -2.1 -1.4 5.4 4.7
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