Courtesy of Mish.
Those rooting for higher inflation were not happy with today’s PPI report that shows producer prices flat for the month vs an Econoday consensus of a 0.1 percent rise.
Producer prices are mixed showing no pressure overall, unchanged in May, but tangible pressure when excluding food and energy at a higher-than-expected increase of 0.3 percent. Energy fell 3.0 percent in the month with food down 0.2 percent yet an apparent positive is a 0.3 percent gain for services with the closely watched trade services component up 1.1 percent after two months of declines. Yet this gain may not be tied to an actual increase in demand but rather to higher margins for producers who are benefiting from lower energy prices. When excluding food, energy and services, prices edged 0.1 percent lower.
This report proved unusually strong in April but was followed by weak inflation readings at the consumer level. The methodology of this report, which measures margins, often makes it difficult to read, yet the service readings in this report do offer cover for Federal Reserve policy makers who appear set to hike their target rate this week. Year-on-year rates show a 2.4 percent rate overall and a 2.1 percent less food and energy rate that is up 2 tenths in the month.
PPI Unchanged, Services +0.3%, goods -0.5% 
The BLS reports PPI for final demand is unchanged in May; services rise 0.3%, goods fall 0.5%
Exclusions
This is a benign report, mostly reflecting energy.
Excluding food, energy and services, PPI edged 0.1% lower. Excluding everything, nothing happened at all.https://t.co/auNObjB0vK
— Mike Mish Shedlock (@MishGEA) June 13, 2017
Mike “Mish” Shedlock
