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:
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The breakdown by component:
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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.
