Producer Price Inflation Lower Than Expected


The PPI and core PPI each rose 0.1% month-over-month. Economists expected a 0.2% rise in both.

This morning, the BLS reported Producer Price Indexes for February.

  • The Producer Price Index for final demand edged up 0.1 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices fell 0.1 percent in both January and December.
  • On an unadjusted basis, the final demand index moved up 1.9 percent for the 12 months ended in February.
  • In February, the increase in the final demand index can be traced to a 0.4-percent rise in prices for final demand goods. The index for final demand services was unchanged.
  • The index for final demand less foods, energy, and trade services inched up 0.1 percent in February following a 0.2-percent advance in January. For the 12 months ended in February, prices for final demand less foods, energy, and trade services climbed 2.3 percent.

Final Demand Goods

The index for final demand goods increased 0.4 percent in February following three consecutive declines. Over 80 percent of the advance can be traced to prices for final demand energy, which rose 1.8 percent. The index for final demand goods less foods and energy edged up 0.1 percent. Conversely, prices for final demand foods fell 0.3 percent.

Forty percent of the increase in the index for final demand goods is attributable to a 3.3-percent rise in gasoline prices. The indexes for diesel fuel, jet fuel, integrated microcircuits, residual fuels, and beef and veal also moved higher. In contrast, prices for fresh and dry vegetables declined 12.8 percent. The indexes for iron and steel scrap and for residential natural gas also decreased.

Final Demand Services

Prices for final demand services were unchanged in February following a 0.3-percent rise in January. In February, a 0.3-percent increase in the index for final demand services less trade, transportation, and warehousing offset a decline of 0.4 percent in margins for final demand trade services and a 1.3-percent decrease in the index for final demand transportation and warehousing services.

In February, prices for traveler accommodation services rose 5.3 percent. The indexes for machinery, equipment, parts, and supplies wholesaling; food retailing; portfolio management; and legal services also moved higher. Conversely, margins for fuels and lubricants retailing fell 10.5 percent. The indexes for apparel, jewelry, footwear, and accessories retailing; airline passenger services; health, beauty, and optical goods retailing; and nonresidential real estate services also declined.

Consensus Estimates


The numbers were below Econoday consensus across the board, three places. Unlike the CPI, consumer prices, PPI numbers seem reasonably believable.

In isolation, there is no pressure on the Fed either way from these numbers.

Mike "Mish" Shedlock

Comments (3)
No. 1-3

Of course it is,god forbid big gov reported true inflation.. omg!!The myriad of checks big gov't hands out 1st of the month would double overnite.and a country that produces nothin other than massive dept and moar gov't...we definetly can't have that!


Lies, damned lies, and statistics (Fed &/or our government less-than-virtuous??) My general merchandise wholesale company is inundated with price hikes. Since 1/1/19 we've seen price increases like never before, and across the board - candies, lighters, automotive products, cigarette papers, 5-Hour energy - you name it, the prices are rising, often by 5 - 10%. When does the smoke and mirrors façade end?


"In isolation, there is no pressure on the Fed either way from these numbers."

Mr Market does exist exist in isolation, but it's his isolation and that is the only isolation that matter to Dat Fed.

Guess we need ourselves some muuuuuooooooore 0% interest rates and bigger and better QE.

There never can ore will be any other possible interpretation of data, other than that.

Global Economics