Updated: 17-Mar-10 08:58 ET

February PPI

Updated: 17-Mar-10 08:58 ET

Highlights

• Producer prices declined 0.6% in February after increasing 1.4% in January.
• The consensus expected a slightly more modest 0.2% decline.
• Core prices rose in-line with consensus expectations at 0.1%.
• The slight increase follows a 0.3% jump in January.

Key Factors

• Inflation worries continue to get expunged with every data release as the movement in prices has been almost completely restricted to the energy sector.
• Energy prices declined 2.9% as gasoline and home heating oil and distillates prices fell 7.4% and 5.6%, respectively. The energy decline is in-line with the 8.7% fall in crude oil prices in February.
• Pipeline pressures were mixed as core intermediate prices increased a hearty 0.9%, but core crude prices declined 0.6%.
• However, given the high unemployment rate, it seems likely that producers will not be able to pass on the higher prices to consumers anytime soon.
  

Big Picture

• PPI trends were highly volatile in 2008, mirroring the trends in global oil prices.  Falling global commodity prices and weak economic demand will keep inflation in check at the producer level.  If global economies remain weak in 2009, as is widely expected, inflation at the producer level will be insignificant.  There may even be concerns about global deflation.

Category	FEB	JAN	DEC	NOV	OCT
Finished Goods	-0.6%	1.4%	0.4%	1.7%	0.4%
Core	0.1%	0.3%	0.0%	0.5%	-0.5%
Capital Equipment	-0.1%	0.3%	-0.1%	0.4%	-0.7%
Consumer Foods	0.4%	0.4%	1.3%	0.7%	1.6%
Energy	-2.9%	5.1%	0.7%	6.3%	1.9%
Energy	-2.9%	5.1%	0.7%	6.3%	1.9%
Intermediate Materials	0.1%	1.8%	0.6%	1.4%	0.6%
Intermediate Materials	0.1%	1.8%	0.6%	1.4%	0.6%
Core	0.9%	0.5%	0.5%	0.3%	0.2%
Core	0.9%	0.5%	0.5%	0.3%	0.2%
Crude Materials	-3.6%	9.6%	0.8%	5.1%	6.1%
Crude Materials	-3.6%	9.6%	0.8%	5.1%	6.1%
Core	-0.6%	6.6%	4.5%	-0.4%	2.3%
Core	-0.6%	6.6%	4.5%	-0.4%	2.3%