WASHINGTON — The U.S. December producer price data were a little worse than expected but probably should be averaged out with prior tame months for the conclusion that inflation remains low.
December PPI posted a 0.4% increase, and core rose 0.3% (0.2688% unrounded). These resulted in a 1.2% gain overall and a 1.4% increase in core over the year.
However, this is the last release of the PPI in its current format. Beginning with the January 2014 calculation released in mid-February, it will next include intermediate/final demand classifications dominated by services, weighting traditional core less. Seasonal adjustments and relative importance factors also will be recalculated at that time.
Food posted a 0.6% decline, as vegetables and meats fell. Pineapples fell 12.5%, their biggest drop since a 29.6% slump in May 2006.
Energy posted a 1.6% rise as most areas gained; seasonal adjustment, however, added a full point to the sector. Gasoline was up 2.2% in its biggest jump since August, though unadjusted gas prices were flat.
Core was driven by a 3.6% gain in tobacco, a 0.5% rise in pharmaceuticals and a 0.5% increase in light trucks. The latter was down 0.2% before adjustment and probably should be ignored.
Intermediate was up 0.6%, and crude rose 2.4%, both driven up by energy. Crude energy, for example, was up 6.2%.
Overall, PPI remains tame over the year and excluding this one month's special factors. December new-version PPI would have been up 0.1%, the Bureau of Labor Statistics said.
These data have few implications for the overall price level, and we doubt that monthly CPI estimates will be revised after this report.
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