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Final Demand Producer Price Inflation Slowest Since Dec 2017

Courtesy of ZeroHedge. View original post here.

Final Demand Producer Prices continued to roll over for the 3rd month in a row, rising just 2.6% YoY (below expectations) – the weakest inflationary impulse since Dec 2017 thanks to a 3.5%MoM decline gasoline prices in September.

Digging into the details:

  • Final demand ex food, energy rose 0.2% m/m vs est. up 0.2%

  • Final demand rose 2.6% y/y vs est. up 2.7%

  • Final demand ex food, energy rose 2.5% y/y vs est. up 2.5%

  • Final demand ex food, energy and trade services rose 0.4% m/m; largest increase since Jan.

  • Final demand personal consumption rose 0.1% m/m

  • Final demand personal consumption rose 2.5% y/y

Final demand services: The index for final demand services increased 0.3 percent in September following two consecutive declines of 0.1 percent. The broad-based advance was led by a 1.8-percent jump in the index for final demand transportation and warehousing services. Prices for final demand services less trade, transportation, and warehousing rose 0.3 percent, and the index for final demand trade services inched up 0.1 percent. 

Over one-third of the advance in prices for final demand services can be traced to the index for airline passenger services, which rose 5.5 percent. The indexes for food and alcohol wholesaling; deposit services (partial); outpatient care (partial); apparel wholesaling; and lawn, garden, farm equipment, and supplies retailing also moved higher. Conversely, margins for apparel, jewelry, footwear, and accessories retailing fell 2.5 percent. The indexes for automotive fuels and lubricants retailing and for traveler accommodation services also declined  

Final demand goods: The index for final demand goods edged down 0.1 percent in September, the first decrease since a 0.5-percent drop in May 2017. Leading the September decline, prices for final demand energy fell 0.8 percent. The index for final demand foods decreased 0.6 percent. In contrast, prices for final demand goods less foods and energy rose 0.2 percent.

Leading the September decline in the index for final demand goods, gasoline prices fell 3.5 percent. The indexes for electric power; iron and steel scrap; canned, cooked, smoked, or prepared poultry; and fresh and dry vegetables also moved down.  

And this occurs as PMI surveys show manufacturing prices slumping but services prices still rising…

So what will Jay Powell do? Seems like President Trump was right, inflation is under control? For now the USD and yields are up (hawkish) very modestly after PPI – presumably since the inflation rate remains above The Fed's mandated 2.0% or the fact that a more narrow measure of PPI, excluding trade as well, showed a solid beat at 0.4%MoM vs 0.2% consensus expectations.   


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