February 2019 Producer Price Index
Submitted by Atlas Indicators Investment Advisors on March 20th, 2019
Prices paid by producers and wholesalers rose marginally in February 2019 according to the Bureau of Labor Statistics. Their Producer Price Index rose 0.1 percent after declining a similar amount in both December and January. Year-over-year, this price proxy is up 1.9 percent, declining modestly from 2.0 percent in January.
Goods led the headline tally higher. The index for final demand goods jumped 0.4 percent after declining for three periods. Over 80 percent of this uptick is attributed to energy costs which rose 1.8 percent. Food, the other volatile component, fell 0.3 percent. Prices for services were largely unchanged.
Prices for earlier stage goods and services were mixed. Processed goods for intermediate demand increased 0.4 percent after falling in each of the prior three months. Over 80 percent of this rise was also attributed to processed energy goods which climbed 1.6 percent. Other processed good excluding food and energy crept up 0.1 percent.
Unprocessed goods for intermediate demand dropped 4.3 percent in February after collapsing 9.3 percent in January. Most of this recent decline was caused by unprocessed energy materials falling 10.7 percent. Unprocessed foodstuffs and feedstuffs declined 1.0 percent and everything else was off 0.7 percent.
Finally, services for intermediate demand slipped 0.1 percent. February’s decline is the first since a drop of 0.3 percent in August 2016. Roughly 40 percent of this drop can be traced to the index for transportation and warehousing. Also contributing were prices for airline passenger services, nonresidential real estate services, and hardware, building materials, and supplies retailing.
Like yesterday’s note on the Consumer Price Index, the PPI seems to be settling into a range with which the Federal Reserve should be happy. Inflation is firm but not running away according to this headline tally. Further down the pike, the intermediate demands for goods and services are not showing signs of unwanted acceleration.
