Producer Price Index Hits High End Of Expectations

Visible but still limited signs of pressure headline January's producer price report where total prices hit the high end of expectations at a 0.4 percent monthly gain. The two core readings, the first excluding food and energy and the second also excluding services, also rose 0.4 percent which just tops high-end expectations.

Pressure in energy, which swings regularly month-to-month, is no surprise, up a very sharp 3.4 percent in the month. It's a bounce back for services that it is most important in this report, up 0.3 percent vs minus 0.1 percent in December and plus 0.2 percent in November. The closely watched trade-services subcomponent is also up 0.3 percent.

Despite the monthly pressure, however, year-on-year rates are still flat, at 2.7 percent overall and at only 2.2 percent excluding food and energy. Yet this report does fit in with recent indications, especially in yesterday's consumer price report, that inflation pressures may finally be simmering.

Recent History Of This Indicator:
Producer prices did show pressure toward the end of last year but not in December when they fell an unexpected 0.1 percent at the headline level on a pullback in service costs. Forecasters are looking for a snap back in January to a gain of 0.4 percent. Less food and energy is seen up 0.2 percent with less food, energy and trade services also expected to rise 0.2 percent.