January 2021 Producer Price Final Demand Increased

The Producer Price Index (PPI) year-over-year inflation increased from +0.8 % to +1.7 %

Analyst Opinion of Producer Prices

Year-over-year inflation pressures significantly grew this month.

Here is what the BLS said in part:

The Producer Price Index for final demand increased 1.3 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance is the largest since the index began in December 2009. Final demand prices rose 0.3 percent in December and 0.1 percent in November. (See table A.) On an unadjusted basis, the index for final demand moved up 1.7 percent for the 12 months ended January 2021, the largest increase since climbing 2.0 percent for the 12 months ended January 2020. Two-thirds of the January advance in prices for final demand can be traced to a 1.3-percent rise in the index for final demand services. Prices for final demand goods increased 1.4 percent. Prices for final demand less foods, energy, and trade services moved up 1.2 percent in January, the largest advance since the index began in September 2013. For the 12 months ended in January, prices for final demand less foods, energy, and trade services rose 2.0 percent, the largest increase since a 2.1- percent advance for the 12 months ended June 2019.

The PPI represents inflation pressure (or lack thereof) that migrates into consumer price.

The market had been expecting (from Econoday):

  Consensus Range Consensus Actual
PPI-Final Demand (PPI-FD) - M/M change 0.3 % to 0.5 % +0.4 % +1.3 %
PPI-FD - Y/Y change 0.8 % to 1.0 % +0.9 % +1.7 %
PPI-FD less food & energy (M/M change -core PPI) 0.1 % to 0.3 % +0.2 % +1.2 %
PPI-FD less food & energy - Y/Y change 1.0 % to 1.3 % +1.2 % +2.0 %
PPI-FD less food, energy & trade services - M/M change 0.2 % to 0.3 % +0.2 % +1.2 %
PPI-FD less food, energy & trade services - Y/Y change     +2.0 %
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