Core Producer Inflation Drops By Most In 9 Months

Tyler Durden's picture

Producer Prices in the US (less the all important food and energy - which no on uses) fell 0.2% month-over-month - the biggest drop since July 2013 - and missing expectations of a 0.1% rise. This is only the third month of 'disinflation in the last 18 months. Perhaps even more relevant is the dramatic slowdown in prices for final demand services which dropped 0.3% (the biggest drop since May 2013) and equal slowest rise year-over-year since the 'recovery' began.

Core PPI (ex food and energy)...

 

And Final Demand Services PPI rose at the slowest pace since the recovery began...

 

Final demand broken down by components:

Via The BLS,

The index for final demand services moved down 0.3 percent in February, the largest decrease since a 0.4-percent decline in May 2013. Most of the February drop can be traced to margins for final demand trade services, which fell 1.0 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

 

Prices for final demand transportation and warehousing services declined 0.2 percent. Conversely, the index for final demand services less trade, transportation, and warehousing inched up 0.1 percent in February.

And the explanation:

Final demand services: The index for final demand services moved down 0.3 percent in February, the largest decrease since a 0.4-percent decline in May 2013. Most of the February drop can be traced to margins for final demand trade services, which fell 1.0 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services declined 0.2 percent. Conversely, the index for final demand services less trade, transportation, and warehousing inched up 0.1 percent in February.

 

Product detail: Over 80 percent of the February decrease in the index for final demand services can be attributed to margins for apparel, footwear, and accessories retailing, which fell 9.3 percent. The indexes for airline passenger services; machinery, equipment, and related parts and supplies wholesaling; food and alcohol retailing; automotive fuels and lubricants retailing; and brokerage compensation for residential property transactions also declined. In contrast, the indexes for both inpatient and outpatient hospital care; health, beauty care, and optical goods retailing; and the U.S. Postal Service moved higher in February.

 

Final demand goods: Prices for final demand goods climbed 0.4 percent in February, the same rate of advance as in each of the prior two months. Leading the broad-based increase in February, the index for final demand goods less foods and energy rose 0.2 percent. Prices for final demand foods and final demand energy also moved higher, 0.6 percent and 0.5 percent, respectively.

 

Product detail: A major factor in the February advance in the index for final demand goods was prices for pharmaceutical preparations, which rose 0.9

percent. The indexes for dairy products, residential natural gas, liquefied petroleum gas, soft drinks, and eggs for fresh use also increased. Conversely, gasoline prices fell 1.1 percent in February. The indexes for processed poultry and for soaps and detergents also decreased.

Or, in brief, snow. Or something.

Charts: Bloomberg