State of the Economy Update: Producer Price Index

The Producer Price Index – a measure of inflation at the producer level – fell by 0.2% in May.

This was the first decline after two consecutive months where the PPI had surprised to the upside.

The May number was below the consensus estimate for a rise of 0.1% and also well below the April reading of +0.6%.

On a year-over-year basis, PPI was up 2.0%, which was slightly below the last month’s reading of +2.1%.

Prior PPI readings: March: +0.5%, February: +0.1%, January 2014: +0.2%, December: +0.1% November: -0.1%, October: -0.2%, September: -0.1%, August: +0.3% July: +0.0%, June: +0.8%, May: +0.5% April: -0.7%, March: -0.6%, February: +0.7, January 2013: +0.2%.

Related Link: State of the Economy Update: Retail Sales

The so-called “core rate” (ex-Food & Energy) also fell, losing -0.1%. in May This was also below the consensus estimate of +0.1% and last month’s +0.5%

Prior Core Rate Readings: March: +0.6%, February: -0.2%, January 2014: +0.2%, December: 0.0%, November: +0.1%, October: +0.2%, September: +0.1%, August: 0.0%, July: +0.1%, June: +0.2%, May: +0.1%, April: +0.1%, March: +0.2%, February: +0.2%, January 2013: +0.2.

In sum, this report removes some of the concern that there is inflation percolating in the economic pipeline.