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Core Producer Prices Jump 0.3%, MOre Than Expected As Sliding Energy Prices Drag Headline PPI Down 0.3%

Tyler Durden's picture




 

The last thing anyone will care about today is seasonally-adjusted US economic data, but in any event, it is worth noting that in a world allegedly drowning in inflation, moments ago the BLS reported that December wholesale producer prices, while dropping less than expected -0.3% on the headline, actually jumped 0.3% excluding food and energy. The 0.3% decline in the final demand index can be traced to a 1.2-percent drop in prices for final demand goods. In contrast, the index for final demand services moved up 0.2 percent. The headline drop was as expected once again driven by declining gasoline, liquefied petroleum gas, home heating oil, and diesel fuel prices offset by advances in the indexes for motor vehicles, up 0.6%, eggs for fresh use, and residential natural gas. In fact, the 2.1% annual increase in final demand services was the highest since May of 2014.

Visually:

The breakdown by component:

Some more on the breakdown:

Final demand goods: The index for final demand goods dropped 1.2 percent in December, the sixth consecutive decrease. Leading the December decline, prices for final demand energy fell 6.6 percent. The index for final demand foods moved down 0.4 percent. Conversely, prices for final demand goods less foods and energy increased 0.2 percent.

Product detail: Over 70 percent of the December decrease in the index for final demand goods is attributable to prices for gasoline, which fell 14.5 percent. The indexes for diesel fuel, liquefied petroleum gas, home heating oil, meats, and primary basic organic chemicals also moved lower. In contrast, motor vehicle prices rose 0.6 percent. The indexes for residential natural gas and chicken eggs also advanced.

Final demand services: The index for final demand services increased 0.2 percent in December after inching up 0.1 percent in November. Over three-fourths of the December rise can be traced to margins for final demand trade services, which climbed 0.6 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing advanced 0.2 percent. Conversely, the index for final demand transportation and warehousing services edged down 0.1 percent.

Product detail: Leading the December rise in prices for final demand services, margins for fuels and lubricants retailing jumped 24.7 percent. The indexes for securities brokerage, dealing, investment advice, and related services; apparel, jewelry, footwear, and accessories retailing; outpatient care (partial); food and alcohol retailing; and portfolio management also moved higher. In contrast, prices for loan services (partial) fell 3.6 percent. The indexes for hospital inpatient care and for health, beauty, and optical goods retailing also declined.

Special grouping, Final demand less foods, energy, and trade: The index for final demand less foods, energy, and trade services inched up 0.1 percent in December after no change in November. For the 12 months ended in December, prices for final demand less foods, energy, and trade services advanced 1.3 percent. (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 fell 1.2 percent in December, the largest decrease since a 1.2-percent drop in July 2009. (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.) Leading the December decline, prices for finished consumer energy goods decreased 6.1 percent. The index for finished consumer foods moved down 0.4 percent. Conversely, prices for finished goods less foods and energy increased 0.3 percent. Within finished goods, falling prices for gasoline, liquefied petroleum gas, home heating oil, diesel fuel, meats, and electronic computers outweighed advances in the indexes for motor vehicles, eggs for fresh use, and residential natural gas.

 

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Thu, 01/15/2015 - 09:50 | 5664411 IronShield
IronShield's picture

The only pertinent question, what is gold doing?

Thu, 01/15/2015 - 10:01 | 5664469 kliguy38
kliguy38's picture

nahhhhh.........its a barbarous relic.

Thu, 01/15/2015 - 10:11 | 5664521 eclectic syncretist
eclectic syncretist's picture

Yeah.....Central Banks don't give a damn about gold.  That must be why the NY Fed uses an insanely secure vault for it's storage.

The vault is safeguarded by a comprehensive multilayered security system, highlighted by a 90-ton steel cylinder protecting the only entry into the vault. The nine-foot-tall cylinder is set within a 140-ton steel-and-concrete frame that, when closed, creates an airtight and watertight seal. Also, once closed, four steel rods are inserted into holes in the cylinder and time clocks are engaged, locking the vault until the next business day.

Security is further enhanced by the massive steel-reinforced concrete walls surrounding the vault and 24-hour monitoring of activity inside and outside the vault by security cameras, as well as the use of motion sensors when the vault is closed. Continuous supervision by the vault control group also ensures that proper security procedures are followed at all times. Additionally, the gold is protected by the New York Fed’s robust building security system and the armed Federal Reserve police force.

http://www.newyorkfed.org/aboutthefed/goldvault.html#security

Thu, 01/15/2015 - 09:55 | 5664441 SheepDog-One
SheepDog-One's picture

Nothing to see here, StuporBowl coming, Katie Perry etc, plus drunk fest for all Murka.

Thu, 01/15/2015 - 09:57 | 5664450 DirkDiggler11
DirkDiggler11's picture

So, Swiss NB shocks the market, BOA and Citi earnings look like a total dumpster fire, PPI numbers show economy is not growing, and jobless numbers for the week shit the bed.

All of this news and the futures move higher ? Uh huh..... Looks like more Red Bull for Kevin as he is at his desk early this morning to SAVE OUR "MARKETS" ...

What a total crock of shit.

Thu, 01/15/2015 - 10:20 | 5664555 eclectic syncretist
eclectic syncretist's picture

Methinks Kevin may be spiking his early morning Red Bull with vodka these days.  Probably one of these brands, seeing as you and I and everyone else here is paying for it.

http://bestvodka.net/most-expensive-vodkas-in-the-world/

Thu, 01/15/2015 - 10:01 | 5664473 esum
esum's picture

Depression cometh..... gold / silver PM only hedge for INFLATION

I will buy my neighbors million dollar Farrari for $100,000 CASH within the next few years...... and his $10 million NYC condo for $1 million CASH....

CASH IS KING....

hey how do you like that gold you bought for $1900......  someone will buy it from you for $700 in a few years

just call 1-800 mattres

Thu, 01/15/2015 - 10:03 | 5664479 ejmoosa
ejmoosa's picture

Current Formula Core Producer Prices

If {consumer demand inflation < -5%} and {monetary inflation > 5%} +X% +Y%

Then A = -0.3%*

* government rounding error of X% to make us feel good - Y% to justify their actions; X and Y may or may not be negative as the need exists.

Thu, 01/15/2015 - 10:41 | 5664706 SillyWabbits
SillyWabbits's picture

Today there seems to be a lot of noise.

You can’t take any of these negative numbers as reality.

Everyone knows that the US Economy is the strongest in the world.

Foreign funds continue to flow into the US Equity Market at record levels which are the highest in 70 years.

The exchange of Pension Funds Cash for worthless collateral assets continues unabated.

Money stolen from foreign nations by crooks who invest those funds into a crooked financial system can only end well.

I mean ……. What could go wrong?

/sarc/

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