February Producer Price Index: Core Final Demand Up 0.2% MoM

This morning's release of the February Producer Price Index (PPI) for Final Demand was at 0.5% month-over-month seasonally adjusted, down from a 1.3% increase last month. It is at 2.8% year-over-year, up from 1.7% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.2% MoM, down from the previous month, and is up 2.5% YoY NSA. Investing.com MoM consensus forecasts were for 0.5% headline and 0.2% core.

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

The Producer Price Index for final demand increased 0.5 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 1.3 percent in January and 0.3 percent in December. (See table A.) On an unadjusted basis, the final demand index moved up 2.8 percent for the 12 months ended in February, the largest increase since rising 3.1 percent for the 12 months ended October 2018.

Most of the February advance in prices for final demand can be traced to a 1.4-percent rise in the index for final demand goods. Prices for final demand services increased 0.1 percent.

Prices for final demand less foods, energy, and trade services moved up 0.2 percent in February, the tenth consecutive advance. For the 12 months ended in February, the index for final demand less foods, energy, and trade services rose 2.2 percent, the largest increase since a 2.4-percent advance for the 12 months ended May 2019. 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.

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