October PPI Analysis-No Material Change in Underlying Trend
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Key “Take Aways”
(1) PPI Final Demand +0.2%, Core +0.4%
(2) PPI up 1.5% yoy, Core +1.6%
(3) PPI Goods -0.4%, PPI Services +0.5%
(4) PPI Personal Consumption +0.3%, yoy +1.9%
(5) PPI Finished Goods -0.3%, yoy +1.7% (Old PPI)
—Stone & McCarthy (Princeton)— The October PPI increased 0.2% after declining 0.1% in September and being flat in August.
The PPI has become more difficult to project, as the coverage of the PPI in its new form has basically tripled. Compared to a year earlier the new headline PPI increased by 1.5%, a downtick from 1.6% in September.
The PPI for Personal Consumption Goods & Services increased by 0.3% in October, following a decline of 0.2% in September. This accounts for about 2/3rds of the overall PPI Final Demand.
The old version of the PPI, that is the PPI for Finished Goods dropped by 0.3% in October following a 0.2% dip in September for a 12-month increase of 1.7%, down from a 2.2% 12-month gain in the period ending September..
Of course, the big difference between the New and the Old versions of the PPI is that the new version is mostly Services, whereas the old version was only Finished Goods.
The New Core PPI rose 0.4% in October after being unchanged in September. Compared to October 2013 this series was up 1.8%, up from 1.6% in the 12-months ending September.
PPI Goods
The PPI for Goods decreased 0.4% after inching down 0.2% in September. Food Prices surged 1.0% after falling 0.7% in September, and 0.5% in August.
Energy prices dropped 3.0% in October after dropping 0.7% in September. The drop in energy prices was an artifact of a 5.8% decline in gasoline prices, and an 11.4% decline in Liquefied Petroleum Gas prices.
The Core Price measure for Goods fell 0.1% in October after rising in September. This series was up 1.7% in comparison to October 2013, a slight deceleration from 1.8% in the period ending September.
PPI Services
The PPI for Services rose 0.5% in October following a 0.1% decline in September and a 0.3% gain in August. The October softness herein was primarily attributable to a 1.5% gain in Trade Services.
The PPI for Personal Consumption rose 0.3% in October following a 0.2% decrease in September and a 0.1% gain in August. The PCE for Goods dropped by 0.5%, led by energy goods. The PPI for the PCE for Services increased 0.6% in October following a 02% decrease in September and a 03% gain in August.
The PPI for Personal Consumption tends to exhibit a pattern similar to the overall PCE deflator, although the 2 series are not identically aligned.
In the 12-months ending October the PPI for Personal Consumption was up 1.9%, same as in the 12-months ending September.
Ah, they remapped the inflation index. It’s what they have to do for it to make sense, the only problem being that we’ll once again be hearing the same ol’ “inflation stats are rigged” song’n’dance...