The Producer Price Index has been reworked, and if you view it from last months report there is little change. This index is volatile (noisy).
The PPI represents inflation pressure (or lack thereof) that migrates into consumer price.
- The BLS reported that the Producer Price Index (PPI) finished goods prices year-over-year inflation rate rose from 1.1% (originally 1.2%) to 1.2%.
- The market had been expecting finished goods price inflation of -0.2% to 0.4% (consensus 0.2%) month-over-month versus the 0.2% reported.
- It was food which drove the month-over-month inflation, while transport was a large deflationary pressure.
- Note that there are several changes associated with this release:
– Seasonal adjustment factors have been recalculated.
– Effective with this release, the Producer Price Index (PPI) includes data for 34 resampled industries classified according to the 2012 North American Industry Classification System (NAICS). The Bureau of Labor Statistics periodically updates the sample of producers providing data for the PPI to reflect current conditions more accurately when the structure, membership, technology, or product mix of an industry shifts. The first results of this systematic process were published in July 1986. Subsequent efforts have been completed at 6-month intervals.
– With this release, BLS transitions from the Stage of Processing (SOP) to the Final Demand-Intermediate Demand (FD-ID) aggregation system. This shift results in significant changes to the PPI news release, as well as other documents available from PPI. The transition to the FD-ID system is the culmination of a longstanding PPI objective to improve the current SOP aggregation system by incorporating PPIs for services, construction, government purchases, and exports. In comparison to the SOP system, the FD-ID system more than doubles current PPI coverage of the United States economy to over 75 percent of in-scope domestic production. The FD-ID system was introduced as a set of experimental indexes in January 2011. Nearly all new FD-ID goods, services, and construction indexes provide historical data back to either November 2009 or April 2010, while the indexes for goods that correspond with the historical SOP indexes go back to the 1970s or earlier.
