June 2020 Producer Price Final Demand Year-Over-Year Growth Remains In Contraction

The Producer Price Index (PPI) year-over-year inflation unchanged at -0.8 %.

Analyst Opinion of Producer Prices

Year-over-year inflation pressures remain soft as this index remains in contraction. This may be the beginning of a deflationary cycle - we will know only in hindsight.

Here is what the BLS said in part:

The Producer Price Index for final demand fell 0.2 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This decrease followed a 0.4-percent increase in May and a 1.3- percent decline in April. On an unadjusted basis, the final demand index moved down 0.8 percent for the 12 months ended in June. In June, the decrease in the final demand index is attributable to a 0.3-percent decline in prices for final demand services. In contrast, the index for final demand goods rose 0.2 percent. Prices for final demand less foods, energy, and trade services advanced 0.3 percent in June, the largest increase since a 0.3-percent rise in January. For the 12 months en

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 0.2 % to 0.5 % +0.4 % -0.2 %
PPI-FD - Y/Y change -1.2 % to 0.1 % -0.5 % -0.8 %
PPI-FD less food & energy (M/M change -core PPI) 0.0 % to 0.2 % +0.1 % +0.1 %
PPI-FD less food & energy - Y/Y change 0.4 % to 0.5 % +0.4 % +0.1 %
PPI-FD less food, energy & trade services - M/M change     +0.3 %
PPI-FD less food, energy & trade services - Y/Y change     -0.1 %

The producer price inflation breakdown:

category month-over-month change year-over-year change
final demand goods +0.2 %  
final demand services -0.3 %  
total final demand -0.2 % -0.8 %
processed goods for intermediate demand +0.9 % -5.0 %
unprocessed goods for intermediate demand +3.1 % -14.5 %
services for intermediate demand -+0.2 % -1.5 %
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