US Producer Price Index – Current & Historical Data
Previous Reading: 0.5% (MoM), 1.7% (YoY)
Analysts Expect: 0.5% (MoM), 2.1% (YoY)
Release Date & Time: Friday, July 12, 12:30 GMT (Released monthly, about 15 days after the reporting month ends.)
Source of Report: Bureau of Labor Statistics, U.S. Department of Labor
Release URL: http://www.bls.gov/news.release/ppi.nr0.htm
Upcoming Release Commentary:
U.S. producer price index gained 0.5 percent in May after falling 0.7 percent in the prior month. The core rate, which excludes volatile items like food and energy, increased 0.1 percent, to record the seventh straight monthly gain. Food prices rebounded from the 0.8 percent decline in April, gaining 0.6 percent. Energy prices climbed 1.3 percent, following a drop of 2.5 percent. Gasoline prices rose 1.5 percent after dipping 6.0 percent in April.
For June, analysts expect a 0.5 percent increase in the top line producer price index, while core PPI should report a modest 0.1 percent increase. Gasoline and food prices likely witnessed a small gain last month. Inflationary pressures remain muted, and the moderate domestic demand makes it extremely difficult for producers to pass on the increased costs to consumers.
U.S. Producer Price Index vs. Core Producer Price Index:
How it impacts the U.S. Dollar:
Since Producer Price Index measures prices at the producer level before they are passed on to the consumers, it is an early indicator of inflation. A rising PPI signals an increase in inflationary pressures, which could force the Federal Reserve to raise interest rates. Similarly, a declining PPI is indicative of falling prices, and may suggest an economic slowdown, which could compel the Fed to slash rates. Since interest rates are the primary factor in currency valuation, a high PPI reading is generally seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish) for the currency. Due to sharp volatility in food and energy prices, which constitute nearly one-quarter of the PPI, analysts and economists prefer monitoring the PPI excluding food and energy, also called the “core” PPI, to get a better picture of the prevailing trend.
Understanding Producer Price Index:
Producer Price Index is a family of indexes that measure the change in the price of finished goods and services sold by producers. The headline figure is expressed as the percentage change in producer price from the prior period. The Producer Price Index comes in three variants:
- PPI Commodity Index (crude): Represents the average monthly price change for commodities such as crude oil, coal and steel.
- PPI Stage of Processing Index (intermediate): Measures price change in goods that have been manufactured at some level but will be sold to further manufacturers to create the finished good. Examples include lumber, steel and cotton.
- PPI Industry Index (finished): Covers finished products bought from producers by businesses to sell to consumers or to use for capital equipment.The finished goods PPI is the source of the core PPI.
The Producer Price Index is considered a major precursor of both consumer price inflation and profits, and is very useful for analyzing potential sales and earnings trends.