WASHINGTON — The January producer price index final demand was reported up 0.2% for a 1.2% gain over the year.
January goods PPI (closer in concept to the old PPI) was up 0.4% and services rose 0.1%. The new methodology for collecting PPI data thus appears to have lowered prices.
Getting to a "core pace" -- traditionally considered prices less the effects of food and energy movements -- is more difficult in the newly revamped PPI report. The Bureau of Labor Statistics now reports on prices broken down by final and intermediate demand, and breaks prices into goods, services, and trade services.
BLS calls attention to final demand less food, energy, and trade services as core. This was up a very modest 0.1% in January, down from a 0.3% rise in December.
Final demand less food & energy, a more traditional core, was up 0.2% for a 1.3% increase over the year. The data all suggest modest inflation.
Foods posted a 1.0% rise as fish, vegetable and meats surged.
Energy posted a 0.3% increase as gas prices fell 1.3%.
In core, cosmetics and pharmaceuticals were rising on their typical January price adjustments, and motor vehicles posted up 0.3%. Loan services were 2.1% higher as rates rose. But medical and electronics prices were falling, as were trade margins away from clothing.
Intermediate demand PPI was up 0.6% in January for a 0.3% rise over the year.
While the revised PPI data are closer to the CPI construction, we still doubt there will be any revisions to CPI estimates after this report. A bottom line is that this new index is less volatile and more inclusive than previously but still shows slow price growth.
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