December 2018 Producer Price Final Demand Year-Over-Year Inflation Unchanged

The Producer Price Index year-over-year inflation remains at 2.5 %.

Analyst Opinion of Producer Prices

The Producer Price Index was unchanged year-over-year. Energy prices decline was offset by food price increase - and service prices modestly declined. Here is what the BLS said in part:

Final demand goods: The index for final demand goods moved down 0.4 percent in December, the same as in November. In December, the decline was the result of a 5.4-percent drop in the index for final demand energy. In contrast, prices for final demand foods advanced 2.6 percent, and the index for final demand goods less foods and energy rose 0.1 percent.

Product detail: Leading the December decrease in the index for final demand goods, gasoline prices dropped 13.1 percent. The indexes for diesel fuel, basic organic chemicals, jet fuel, residual fuels, and beef and veal also moved down. Conversely, prices for fresh fruits and melons jumped 48.9 percent. The indexes for construction machinery and equipment and for residential natural gas also increased. (See table 4.)

Final demand services: Prices for final demand services edged down 0.1 percent in December after increasing for three straight months. The decline was led by a 0.3-percent decrease in the index for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services fell 0.2 percent. In contrast, the index for final demand services less trade, transportation, and warehousing inched up 0.1 percent.

Product detail: The December decrease in prices for final demand services was led by margins for food retailing, which fell 2.5 percent. The indexes for cellular phone and other wireless telecommunication services, automotive fuels and lubricants retailing, residential real estate loans (partial), and airline passenger services also moved lower. Conversely, prices for guestroom rental rose 2.9 percent. The indexes for inpatient care, machinery and equipment parts and supplies wholesaling, and long-distance motor carrying also increased.

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