THE BASIS POINT

PPI: -1.9% For December, Due to -9.3% Energy Prices and -1.5% Food Prices

 

The US Producer Price Index, which measures inflation at the business and manufacturing levels of the economy, was -1.9% in December and -0.9% year-over-year through December. Excluding volatile oil and food costs from the readings, “Core” PPI for December was +0.2% and +4.3% YOY through December. Here’s a link to the November PPI and below are 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.

Overall PPI Fourth Quarter:
Oct-Mo= -2.8%, Nov-Mo= -2.2%, Dec-Mo=-1.9%
Oct-Yr= +5.2%, Nov-Yr= +0.4%, Dec-Yr=-0.9%

Core PPI Fourth Quarter
Oct-Mo= +0.4%, Nov-Mo= +0.1%, Dec-Mo=+0.2%
Oct-Yr= +4.4%, Nov-Yr= +4.2%, Dec-Yr=+4.3%

Energy prices, driven by oil declines, dropped -9.3% for December. And food also dropped -1.5% for the month. Inflation is no longer a large concern, and deflation is now a bigger worry. 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.

Tomorrow we’ll have the consumer inflation report.

 

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