Today's release of the November Producer Price Index (PPI) for Final Demand was unchanged month-over-month seasonally adjusted, down from 0.4% last month. It is at 1.1% year-over-year, unchanged from last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at -0.2% MoM, down from 0.3% the previous month and is up 1.3% YoY NSA. Investing.com MoM consensus forecasts were for 0.2% headline and 0.2% core.

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

The Producer Price Index for final demand was unchanged in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices increased 0.4 percent in October and fell 0.3 percent in September. (See table A.) On an unadjusted basis, the final demand index advanced 1.1 percent for the 12 months ended in November.

In November, a 0.3-percent rise in prices for final demand goods offset a 0.3-percent decrease in the index for final demand services.

The index for final demand less foods, energy, and trade services was unchanged in November after inching up 0.1 percent in October. For the 12 months ended in November, prices for final demand less foods, energy, and trade services moved up 1.3 percent, the smallest advance since climbing 1.3 percent in the 12 months ended September 2016. More…

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.

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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.

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