The Producer Price Index year-over-year inflation marginally grew from 2.7 % to 2.8 %.

Analyst Opinion of Producer Prices

The Producer Price Index marginally grew year-over-year. Here is what the BLS said in part:

For the 12 months ended in February, prices for final demand less foods, energy, and trade services increased 2.7 percent, the largest rise since 12-month percent change data were available in August 2014.

Although the monthly growth numbers appear high, the year-over-year numbers changed little from last month – except for unprocessed goods for intermediate demand which doubled.

The PPI represents inflation pressure (or lack thereof) that migrates into consumer price.

The market had been expecting (from Bloomberg):

month over month change Consensus Range Consensus Actual PPI-Final Demand (PPI-FD) 0.1 % to 0.5 % +0.2 % +0.2 % PPI-FD less food & energy (core PPI) 0.2 % to 0.3 % +0.2 % +0.2 % PPI-FD less food, energy & trade services 0.2 % to 0.3 % +0.3 % +0.4 %

The producer price inflation breakdown:

category month-over-month change year-over-year change final demand goods -0.1 %   final demand services +0.3 %   total final demand +0.2 % +2.8 % processed goods for intermediate demand +0.7 % +4.8 % unprocessed goods for intermediate demand +2.8 % +5.6 % services for intermediate demand +0.5 % +2.9 %

In the following graph, one can see the relationship between the year-over-year change in intermediate goods index and finished goods index. When the crude goods growth falls under finish goods – it usually drags finished goods lower.

Percent Change Year-over-Year – Comparing PPI Finished Goods (blue line) to PPI Intermediate Goods (red line)

Econintersect has shown how pricing change moves from the PPI to the Consumer Price Index (CPI).