Updated: 15-Nov-22 09:24 ET
| October PPI |
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| Updated: 15-Nov-22 09:24 ET |
Highlights
- The Producer Price Index for final demand increased 0.2% month-over-month in October (Briefing.com consensus +0.5%) following a downwardly revised 0.2% increase (from 0.4%) for September.
- Excluding food and energy, the Producer Price Index for final demand was unchanged (Briefing.com consensus +0.4%) following a downwardly revised 0.2% increase (from 0.3%) in September.
- The monthly changes left the Producer Price Index for final demand up 8.0% year-over-year, versus 8.4% in September, and the Producer Price Index for final demand, excluding food and energy, up 6.7% year-over-year, versus 7.1% in September.
Key Factors
- The index for final demand goods increased 0.6% m/m, with most of the increase driven by a 2.7% jump in prices for final demand energy.
- The index for final demand services dipped 0.1% m/m, which was the first decline since November 2020. The downturn was driven by a 0.5% drop in margins for final demand trade services.
Big Picture
- The key takeaway from the report is the clear signs of disinflation embedded in it. Like the CPI report, inflation is still too high at the producer level, yet the direction is more important than the level for the market at this point. The lower trend in PPI, coupled with the decline in processed goods for intermediate demand (-0.2% m/m) and unprocessed goods for intermediate demand (-11.7% m/m), will feed the market's newfound belief that the Fed is apt to take a less aggressive rate-hike approach and ultimately settle on a lower terminal rate than previously thought.
| Category | OCT | SEP | AUG | JUL | JUN |
| Final Demand | 0.2% | 0.2% | 0.0% | -0.4% | 0.9% |
| Core (excluding ...) | |||||
| Food and Energy | 0.0% | 0.2% | 0.4% | 0.3% | 0.3% |
| Food, Energy, and Trade | 0.2% | 0.3% | 0.2% | 0.2% | 0.3% |
| Final Demand Goods | |||||
| Total | 0.6% | 0.3% | -1.1% | -1.8% | 2.2% |
| Energy | 2.7% | 0.6% | -5.4% | -9.1% | 8.9% |
| Finished Goods | 1.1% | 0.4% | -1.1% | -1.8% | 2.7% |
| Final Demand Services | |||||
| Total | -0.1% | 0.2% | 0.5% | 0.2% | 0.3% |
| Trade | -0.5% | -0.3% | 1.1% | 0.7% | 0.3% |
| Intermediate Demand | |||||
| Processed | -0.2% | 0.0% | -1.5% | -2.3% | 2.0% |
| Unprocessed | -11.7% | -0.9% | 4.5% | -9.2% | 4.8% |
| Services | 0.3% | 0.4% | 0.6% | 0.3% | -0.3% |