Producer Price Index Eases In November

Inflation at the producer level eased somewhat in November. The PPI for total final demand declined 0.2 percent after rising 0.2 percent in October. The consensus expected a 0.1 percent decline. Excluding food and energy, producer price inflation was flat, following a jump of 0.4 percent in October. Analysts projected a 0.1 percent rise.

The index for final demand goods fell 0.7 percent in November, the fifth consecutive decrease. The broad-based November decline was led by prices for final demand energy, which dropped 3.1 percent. The index for final demand goods less foods and energy edged down 0.1 percent, and prices for final demand foods fell 0.2 percent.

The index for final demand services inched up 0.1 percent in November subsequent to a 0.5-percent rise in October. In November, prices for final demand services less trade, transportation, and warehousing, as well as margins for final demand trade services, rose 0.1 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, the index for final demand transportation and warehousing services dropped 0.8 percent.

Overall, there is little inflation pressure at the producer level. This likely will carry over to the consumer sector with the CPI released next week.

Recent History Of This Indicator:
The producer price index for final demand was stronger than expected in October but on average remains sluggish. Headline inflation posted at a monthly 0.2 percent versus expectations of a 0.1 percent dip and a 0.1 percent decrease in September. Excluding food & energy, producer price inflation jumped 0.4 percent compared to no change in September. The index for final demand services moved up 0.5 percent in October, the largest increase since a 0.5-percent rise in July 2013. The October advance can be traced to a 1.5-percent increase in margins for final demand trade services. The index for final demand goods moved down 0.4 percent in October, the fourth consecutive decrease. The October decline was led by prices for final demand energy, which fell 3.0 percent. The index for final demand goods less foods and energy edged down 0.1 percent. Conversely, prices for final demand foods moved up 1.0 percent.