Core Producer Price Inflation Tumbles To Weakest Since 2016

Following the surprise acceleration in consumer prices, producer prices were expected to re-accelerate after diverging for three months. While the MoM gain in headline PPI was a slight disappointment (+0.1% vs +0.2% MoM) but on a YoY basis it met expectations at +1.3% (still well below CPI)...

Source: Bloomberg

However, core producer price gains (ex-food and energy) were the weakest since August 2016 at just +1.1% YoY...

Source: Bloomberg

Final Demand Goods:

Over 60 percent of the December increase in the index for final demand goods can be attributed to a 3.7-percent advance in gasoline prices.

The indexes for diesel fuel, fresh fruits and melons, carbon steel scrap, residential electric power, and pork also moved higher. Conversely, prices for beef and veal fell 7.0 percent.

Final Demand Services:

In December, prices for transportation of passengers (partial) jumped 8.5 percent. The
indexes for machinery and vehicle wholesaling; machinery and equipment parts and supplies wholesaling; health, beauty, and optical goods retailing; and portfolio management also increased.

In contrast, margins for apparel, jewelry, footwear, and accessories retailing declined 3.7 percent. The indexes for chemicals and allied products wholesaling, guestroom rental, fuels and lubricants retailing, and \professional and commercial equipment wholesaling also moved lower.

Certainly nothing here to spook The Fed into any hawkish action.