Producer Prices Miss, Plunge To Negative After April Surge

Tyler Durden's picture

After the surge in prices in April, May's Producer Prices fall 0.2% MoM (compoared to a +0.1% expectation). Year-over-year inflation rose 2.0% (down from last month's 2.1% and missing expectations of 2.4% significantly). This is the first MoM drop since Febuary for the headline and core numbers as it appears vehicle rental appeared to see prices implode. PPI Ex Food and Energy (core), saw prices rise at 2.0% - the fastest since May 2012.

The breakdown of the drop, first in services: Most of the decline in May is attributable to the index for final demand trade services, which fell 0.5 percent. And then by products:  The indexes for securities brokerage, dealing, investment advice, and related services; apparel, footwear, and accessories retailing; health, beauty care, and optical goods retailing; food wholesaling; and consumer loans (partial) also moved lower.

It appears that any hopes of "benign" inflation finally taking hold have to be postponed once more...

The breakdown in chart format:

And in detail:

Final demand services: Prices for final demand services moved down 0.2 percent in May, the first decrease since a 0.3-percent drop in February. Most of the decline in May is attributable to the index for final demand trade services, which fell 0.5 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing also moved lower, inching down 0.1 percent. In contrast, the index for final demand transportation and warehousing services climbed 0.9 percent.

 

Product detail: In May, a 1.1-percent decrease in margins for machinery and equipment wholesaling accounted for about half of the decline in prices for final demand services. The indexes for securities brokerage, dealing, investment advice, and related services; apparel, footwear, and accessories retailing; health, beauty care, and optical goods retailing; food wholesaling; and consumer loans (partial) also moved lower. Conversely, prices for truck transportation of freight increased 0.9 percent in May. The indexes for fuels and lubricants retailing and for legal services also advanced.

 

Final demand goods: The index for final demand goods fell 0.2 percent in May, the largest decrease since a 0.7-percent drop in April 2013. In May, prices for final demand energy and final demand foods both declined 0.2 percent. The index for final demand goods less foods and energy was unchanged.

 

Product detail: In May, gasoline prices fell 0.9 percent, accounting for about half of the decline in the final demand goods index. Prices for basic organic chemicals; pork; pharmaceutical preparations; residential electric power; and natural cheese, except cottage cheese also moved down. In contrast, the diesel fuel index rose 3.9 percent in May. Prices for processed poultry and cigarettes also advanced. Special grouping, Final demand less foods, energy, and trade: Prices for final demand less foods, energy, and trade services were unchanged in May, following advances of 0.3 percent in April and March. (The index for final demand less foods, energy, and trade services represents about two-thirds of final demand.)

 

Special grouping, Finished goods: Prices for finished goods edged down 0.1 percent in May. (The finished goods index represents about two-thirds of final demand goods, through the exclusion of the weight for government purchases and exports. The finished goods index represents about one-quarter of overall final demand.) This decrease was led by prices for finished consumer energy goods, which fell 0.3 percent. The index for finished consumer foods declined 0.1 percent. Conversely, prices for finished goods less foods and energy advanced 0.1 percent. Within finished goods, falling prices for gasoline; pork; pharmaceutical preparations; residential electric power; and natural cheese, except cottage cheese outweighed higher prices for cigarettes, processed poultry, diesel fuel, and passenger cars.

Source: BLS

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Sudden Debt's picture

inflation? You must be mistaken sir!

are... are you a terrorist???!!!!

 

ALARM!! ALARM!!! TERRRORIST!!! ALARM!!! ALARM!!!

 

GetZeeGold's picture

 

 

I'm not a terrorist....I voted for Cantor.

 

Recovery summer.....get ready for it!

max2205's picture

Who believes these govt numbers....LOL

madcows's picture

No one.  track your own numbers to find out what real inflation is.

I just finished Animal Farm, after having read 1984.  In both cases Orwell had sinister governments lying to the people with cooked production numbers.  It was no different then than it is now.

Corruption is corruption.  And our government is a sham.  FU Obamao and Co.

spastic_colon's picture

who needs semi factual data when we will get the "real" story today with the consumer "sentiment" "survey" that will save the markets.  Cuz even tho incomes are falling and everything is up in price consumers will be delighted....according to the stock market.

disabledvet's picture

Actually it's the economists who are lying...not the Government.

LawsofPhysics's picture

The cost of feeding your family, keeping them warm, driving them around, educating them, and paying for healthcare is up a bit more than 2% as far as I can tell. 

The theft/fraud continues.

buzzsaw99's picture

they'll be saying the exact same thing the day oil hits $299/bbl

overmedicatedundersexed's picture

green shooots, damn it I want my greeeen shooots.

Yen Cross's picture

   Meanwhile 10's are up almost 2% in yield because well, it's Friday.

  U.S. 10-Year    2.631    2.586    2.633    2.586    +0.045    +1.75%   

 

buzzsaw99's picture

the rent is too damn high - lolz

The Most Interesting Frog in the World's picture

Yeah, how does this make sense????

madcows's picture

I have YoY inflation on the basics (Food, gas, household, clothes, utilities) at 13.1%.

Gas isn't the big one, coming in at 2.74%.  Food is at 6.6%.  Utilities are around 4%. 

The big ones are clothes at 30%, and household goods.

101 years and counting's picture

but, you can buy a new 60inch tv for the bathroom for $999, down from $1699 last year.  thats deflation.  

orangegeek's picture

So the real number is probably 10% less (or more).

 

Anyone think it's more?  less?  Anyone?  Anyone?

 

If you want to jam the establishment, just stop spending.  Essentials only.  Pay in cash (debit and credit is revenue for banks and cc companies).

 

We were watching TV last night with our HDTV $40 antenna and three consecutive ads came on telling us we need to be somewhere, doing something different and buying shit we don't need.

 

We laughed and turned the TV off.

Hindenburg...Oh Man's picture

Wow, futures really climbed a wall from 830 to 900

BigRedRider's picture

Happy Friday the 13th, y'all!

I'm off to the links with BO...

novictim's picture

Use some deodorant first, k?

novictim's picture

---> Inflation is not bad or good but is a tool.

---> Inflation is always bad.

 

I know the results will be overwhemingly negative.  But someone has to try to get through to you.