Producer Prices Jump MoM Most Since Sept 2012 Driven By Higher Energy Costs

Producer Prices Final Demand rose 0.5% MoM - the biggest monthly rise since September 2012. With the gasoline index up a stunning 17% (but but but) 80% of the broad-based advance is attributable to prices for final demand energy - which increased 5.9%. In contrast, Final Demand PPI YoY Ex Food & Energy dropped to +0.6% - the lowest on record in the short time series.


Biggest jump in PPI in almost 3 years...



Final demand goods: The index for final demand goods moved up 1.3 percent in May following a 0.7-percent decline in April. Eighty percent of the broad-based advance is attributable to prices for final demand energy, which increased 5.9 percent. The indexes for final demand goods less foods and energy and for final demand foods rose 0.2 percent and 0.8 percent, respectively.

Product detail: Sixty percent of the May advance in prices for final demand goods can be traced to the gasoline index, which jumped 17.0 percent. Prices for diesel fuel, chicken eggs, jet fuel, pharmaceutical preparations, and motor vehicles also moved higher. In contrast, the index for residential natural gas fell 1.6 percent. Prices for hay, hayseeds, and oilseeds and for primary basic organic chemicals also decreased.



Final demand services: The index for final demand services was unchanged in May after inching down 0.1 percent in April. In May, a 0.6-percent increase in margins for final demand trade services offset a 0.2-percent decline in prices for final demand services less trade, transportation, and warehousing and a 0.1-percent decrease in the index for final demand transportation and warehousing services. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Among final demand services in May, margins for food and alcohol retailing advanced 4.2 percent. The indexes for apparel, jewelry, footwear, and accessories retailing; television, video, and photographic equipment and supplies retailing; inpatient care; and residential real estate services (partial) also moved higher. Conversely, prices for services related to securities brokerage and dealing fell 7.4 percent. The indexes for machinery and equipment wholesaling; loan services (partial); health, beauty, and optical goods retailing; and wireless telecommunication services and also declined.



But core PPI dropped to its lowest on record YoY...


But the best news: alcoholic beverage prices supposedly dropped by 0.1% over the past month.