This morning's release of the January Producer Price Index (PPI) for Finished Goods was up 1.3% month-over-month seasonally adjusted, up from no change last month. It is at 12.5% year-over-year, unchanged from last month, on a non-seasonally adjusted basis. Core Finished Goods (less food and energy) came in at 1.0% MoM, up from the previous month and is up 7.2% YoY NSA.

The January PPI for Final Demand was at 1.0% month-over-month seasonally adjusted, up from a 0.4% increase last month. Investing.com MoM consensus forecasts for Final Demand were for 0.5% headline and 0.5% core. Annual Revisions were made.

Here is the summary of the news release on Final Demand:

The Producer Price Index for final demand increased 1.0 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 0.4 percent in December 2021 and 0.9 percent in November. (See table A.) On an unadjusted basis, final demand prices moved up 9.7 percent for the 12 months ended January 2022. In January, the index for final demand services rose 0.7 percent, and prices for final demand goods moved up 1.3 percent. Prices for final demand less foods, energy, and trade services increased 0.9 percent in January 2022, the largest increase since rising 1.0 percent in January 2021. For the 12 months ended January 2022, the index for final demand less foods, energy, and trade services moved up 6.9 percent. More…

Also the BLS has decided to begin tracking PPI to three decimal points:

Effective with the release of November 2021 Producer Price Index (PPI) data, on December 14, 2021, the Bureau of Labor Statistics will publish interim index values for all preliminary PPI data, starting with values for August through October 2021. Within PPI, interim indexes are defined as recalculated indexes for the 3 months between the initial publication and final revision of PPI data. With this modification, data within the 3-month interim revision period will be updated and published on a monthly basis. This replaces the current policy of only publishing revised data once, when the data have been finalized 4 months after original publication. PPI data will continue to be finalized 4 months after initial publication.

The publication of interim index values will allow for greater transparency regarding PPI revisions, and will align PPI official index publication with Bureau of Economic Analysis use of PPI interim index data as an input to Gross Domestic Product calculations.

Finished Goods: Headline and Core

The BLS shifted its focus to its new "Final Demand" series in 2014, a shift we support. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core. Since our focus is on longer-term trends, we continue to track the legacy Producer Price Index for Finished Goods, which the BLS also includes in their monthly updates.

As this (older) overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.

FRED® Graphs ©Federal Reserve Bank of St. Louis. All rights reserved.

As the next chart shows, the Core Producer Price Index is far more volatile than the Core Consumer Price Index. For example, during the last recession producers were unable to pass cost increases to the consumer.