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Economy in Brief

U.S. PPI Posts Another Strong Increase in February
by Tom Moeller  March 12, 2021

• Gasoline & food prices strengthen.

• Core finished goods price inflation moderates.

• Service prices edge higher following January spike.

The Producer Price Index for final demand rose 0.5% (2.8% y/y) in February following a 1.3% strengthening in January. The index has risen at an 8.6% annual rate during the last three months. A 0.5% rise had been expected in the Action Economics Forecast Survey. The PPI excluding food & energy rose 0.2% (2.5% y/y) after increasing 1.2% in January. The index rose at a 5.8% rate during the last three months. A 0.3% rise had been expected. The PPI less food, energy & trade services rose 0.2% (2.2% y/y) after strengthening 1.2% in January.

Energy prices surged 6.0% (5.5% y/y) in February following a 5.1% January advance. Gasoline prices jumped 13.1% (3.5% y/y) while the costs of home heating oil improved 4.6% (1.4% y/y).

Food prices improved 1.3% last month (4.5% y/y) after rising 0.2% in January. Beef & veal prices jumped 13.0% (15.9% y/y) and dairy product prices rose 1.0% (-2.9% y/y).

The 0.2% increase in the core PPI reflected 0.3% rise (2.5% y/y) in goods prices less food & energy. Capital equipment prices rose 0.3% (1.5% y/y) for a second month. Core consumer goods edged 0.1% higher (1.8% y/y) following a 0.4% rise. The cost of nondurable consumer goods held steady (1.6% y/y) while durable consumer goods prices improved 0.3% (2.1% y/y). Private capital equipment prices rose 0.3% (1.5% y/y) for a second month.

Services prices edged 0.1% higher (2.5% y/y) in February following a 1.3% jump. Trade services edged 0.1% higher (3.3% y/y) following a 1.0% jump. The price of transportation & warehousing of finished goods for final demand rose 0.2% (3.8% y/y) following a 1.8% rise.

Construction costs rose 0.3% (1.0% y/y), the strongest of four consecutive monthly increases.

Intermediate goods prices surged 2.7% in February (6.6% y/y) following a 1.7% rise. These gains were bolstered by the strength in energy prices.

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.

Producer Price Index (SA, %) Feb Jan Dec Feb Y/Y 2020 2019 2018
Final Demand 0.5 1.3 0.3 2.8 0.2 1.7 2.9
   Excluding Food & Energy 0.2 1.2 0.1 2.5 0.9 2.1 2.6
   Excluding Food, Energy & Trade Services 0.2 1.2 0.4 2.2 0.7 2.0 2.8
   Goods 1.4 1.4 1.0 3.4 -1.4 0.4 3.4
      Foods 1.3 0.2 -0.2 4.5 1.4 1.9 0.2
      Energy 6.0 5.1 4.9 5.5 -12.9 -4.6 10.2
    Goods Excluding Food & Energy 0.3 0.8 0.5 2.5 0.7 1.4 2.5
   Services 0.1 1.3 -0.1 2.5 0.9 2.3 2.6
      Trade Services 0.1 1.0 -0.8 3.3 1.7 2.4 1.8
   Construction 0.3 0.2 0.1 1.0 2.3 5.0 4.1
Intermediate Demand - Processed Goods 2.7 1.7 1.4 6.6 -2.9 -1.4 5.3
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