Today’s data showed that producer prices (Producer Price Index) fell 0.2% in December. Analysts at Wells Fargo point out the slide was a consequence of lower energy costs and they see core readings, suggesting the trend in inflation remains little changed.
Key Quotes:
“Lower energy prices sent the producer price index (PPI) down 0.2% in December. Prices for services ticked down 0.1%, but are up 2.8% over the past year””the strongest pace this expansion. The sharp drop in oil prices over the fourth quarter has pulled down energy input costs for a second straight month.”
“Ex-food, energy and trade services, our preferred measure of core PPI was flat in December, but up 2.8% from a year ago.”
“While the government shutdown may delay the release of the FOMC’s preferred inflation measure later this month, the PPI and CPI suggest core PCE remains close to 2.0%.”
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