2010 Economic Calendar
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Producer Price Index
Released On 1/20/2010 8:30:00 AM For Dec, 2009
PriorConsensusConsensus RangeActual
PPI - M/M change1.8 %0.0 %-0.2 % to 0.2 %0.2 %
PPI -Yr/Yr change2.7 %4.7 %
PPI less food & energy - M/M change0.5 %0.1 %0.0 % to 0.2 %0.0 %
PPI less food & energy - Yr/Yr change1.2 %0.9 %

Highlights
Headline and core PPI inflation slowed sharply in December. The headline number did not improve as much as hoped while the core eased more than expected. The overall PPI rose 0.2 percent after spiking 1.8 percent in November. The latest gain was a somewhat warmer than the consensus forecast for no change in the index. At the core level, the PPI eased to a flat reading after jumping 0.5 percent in November. The market had expected a 0.1 percent up tick. The headline increase was led by a 1.4 percent jump in food prices as energy dipped 0.4 percent. The core was kept soft in part by a 1.2 percent drop in prices for light trucks.

For the overall PPI, the year-on-year rate increased to 4.7 percent from 2.7 percent in November (seasonally adjusted). The core rate year-ago pace edged down to 0.9 percent from 1.2 percent the previous month. On a not seasonally adjusted basis for December, the year-ago increase for the headline PPI was 4.4 percent while the core was up 0.9 percent.

Net, PPI was in line with expectations. The latest CPI and PPI reports let the Fed continue to characterize inflation as subdued and keep policy on hold. There was little market reaction to today's report but the PPI report had to compete with a lower than expected housing starts number, offset by higher permits.

Recent History Of This Indicator
The producer price index jumped 1.8 percent in November after gaining 0.3 percent in October. The November gain was led by a 6.9 percent spike in energy and a 0.5 percent gain for food. At the core level, the PPI rebounded 0.5 percent after a huge 0.6 percent drop in October. Looking ahead, the headline PPI is likely to be soft if the uptick of 0.1 percent in the December CPI is an indication. But the PPI does not have services components and will not be helped by weak shelter costs as was the case with the CPI. Higher energy costs likely will have more impact on the PPI than was the case with the CPI.

Definition
The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of indexes that measure the average change over time in the prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. Effective with the January 2014 PPI data release in February 2014, BLS transitioned from the Stage of Processing (SOP) to the Final Demand-Intermediate Demand (FD-ID) aggregation system. The headline PPI (for Final Demand) measures price changes for goods, services, and construction sold to final demand: personal consumption, capital investment, government purchases, and exports.  Why Investors Care
 
[Chart]
It is always a good idea to look at more than a few months of data to get a sense of changes in established trends. Monthly changes in the PPI are mainly volatile because of sharp fluctuations in food and energy prices. The core PPI eliminates the sharper fluctuations.
Data Source: Haver Analytics
 
[Chart]
Yearly changes tend to smooth out more severe monthly fluctuations and give a better idea of the underlying rate of inflation. Even with the smoother trend, note that the core PPI does not fluctuate as much as the total PPI.
Data Source: Haver Analytics
 

 

2010 Release Schedule
Released On: 1/202/183/174/225/186/167/158/179/1610/1411/1612/14
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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