Deflation Re-Emerges - Producer Prices Plunge In December

Following the deflationary core import price index print, producer prices dropped 0.1% in December, missing expectations dramatically and 'deflating' the most since Aug 2016.

  • Final demand ex food, energy fell 0.1% m/m vs est. up 0.2%
  • Final demand rose 2.6% y/y vs est. up 3%
  • Final demand ex food, energy rose 2.3% y/y vs est. up 2.5%
  • Final demand ex food, energy and trade services rose 0.1% m/m
  • Final demand personal consumption fell 0.2% m/m
  • Final demand personal consumption rose 2.6% y/y

Under the headlines:

The index for final demand services moved down 0.2 percent in December following nine consecutive increases.

Most of the decrease can be traced to a 0.6-percent decline in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services fell 0.4 percent.

Conversely, the index for final demand services less trade, transportation, and warehousing inched up 0.1 percent.

Product detail: A major factor in the December decline in prices for final demand services was the index for automotive fuels and lubricants retailing, which fell 10.7 percent.

The indexes for loan services (partial); airline passenger services; apparel, footwear, and accessories retailing; legal services; and health, beauty, and optical goods retailing also moved lower.

In contrast, prices for inpatient care advanced 0.7 percent. The indexes for truck transportation of freight and apparel wholesaling also increased.

In December prices for beef and veal fell 6.3 percent. The indexes for gasoline, fresh and dry vegetables, liquefied petroleum gas, and turbines and turbine generator sets also moved lower.


gatorengineer Thu, 01/11/2018 - 08:48 Permalink

Bullshit.  Go to the grocery store, or pay your gas / Nat gas or powerbill, deflation my ass.  On the industrial and manufacturing side yes there is as no one has any work as there is no demand, and places are buying what work there is to keep the doors open.

khakuda gatorengineer Thu, 01/11/2018 - 10:00 Permalink

Yup.  There is no way that these statistic reflect reality whatsoever.  The statistics were tweaked in the 70s and 80s when inflation was running at 18% to pretend it wasn't that high so the politicians wouldn't get hung.  They are designed to not show inflation.  If the price of something goes up, they take it out of the index on the BS theory that people will trade to something cheaper.  Steak goes out, Ramen noodles come in.


And with gasoline and oil continuing to go up in price, they can't be serious about this:

Product detail: A major factor in the December decline in prices for final demand services was the index for automotive fuels and lubricants retailing, which fell 10.7 percent.

In reply to by gatorengineer

Davidduke2000 Thu, 01/11/2018 - 08:49 Permalink

all kind of charts and numbers mean absolutely nothing because they are lies. I know that this Christmas my 2 turkeys invitations cost me $500 for food alone compared to $350 last year, that's $150 more for the same stuff, I do not need an accountant to tell me the government numbers are fucked up.

NoWayJose Thu, 01/11/2018 - 09:03 Permalink

A major decline was in automotive fuels and lubricants?  But the number is  ex energy.

Consumers down?  But credit cards spending through the roof and sales at Target, Macy’s, Amazon are way up?


LawsofPhysics Thu, 01/11/2018 - 09:27 Permalink

LOL!!!  How much DEBT are those producers servicing!?!?!?!?!

Does anyone really think any of those "deflationary savings" will be passed on to the customer?!?!?!

"Full Faith and Credit"

same as it ever was!!!!

franzpick Thu, 01/11/2018 - 11:02 Permalink

When people are running to get out of money and into things, it is a prelude to inflation. In the current debt-trapped, stimulus-immune, failing world economy, it is a prelude to stagflation. See flight-to-safety money pouring into parabolic run-ups in equities, oil, metals, lumber and cryptos, for several examples, and watch AU and AG join the run-up when the about-to-fail dollar index breaks 90 on its way to 80: