Producer Price Index Shows Weakness

Producer prices show wide weakness and may raise talk that deflationary pressures are building, not easing. The PPI-FD fell 0.5 percent in September which is just below Econoday's low estimate for minus 0.4. Year-on-year, producer prices are now deeply in the negative column at minus 1.1 percent. And it's not all due to energy, excluding which prices fell 0.3 percent though the year-on-year rate is still in the plus column, at plus 0.8 percent but down 1 tenth from August. Excluding food, energy and services, where the latter had been showing price traction, prices still fell 0.3 percent with the year-on-year rate at only 0.5 percent.

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Producer prices in September are expected to show even less pressure than the prior month, down a consensus 0.2 percent for the headline vs no change in August. The ex-food and ex-energy core reading is also soft, seen up 0.1 percent vs August's plus 0.3 percent.