THE BASIS POINT

PPI: -1.3% YOY Through February, Core PPI +4% YOY. Inflation Not A Threat Now.

 

The US Producer Price Index, which measures inflation at the business and manufacturing levels of the economy, was +0.1% in February and -1.3% year-over-year through February. Excluding volatile oil and food costs from the readings, “Core” PPI for February was +0.2% and +4.0% YOY through February. Here’s a link to the December PPI which includes complete PPI numbers for 4Q2008. You can also view and download historical PPI data by scrolling down to our Data section on the right side of the site.

Inflation is no longer a large concern, and deflation is now a bigger worry as the credit crisis slogs on. Core year-over-year PPI is still higher than the Fed’s inflation comfort zone of 1-2% but the monthly figure is holding at lows again as aggregate demand drops because businesses and consumers are weak. Today’s report didn’t have much of an impact on stock or bond markets and rates were steady on the day.

Tomorrow we’ll have the consumer inflation report.

 

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