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Producer Price Index  
Released On 4/14/2009 8:30:00 AM For Mar, 2009
PriorConsensusConsensus RangeActual
PPI - M/M change0.1 %0.1 %-0.5 % to 0.4 %-1.2 %
PPI less food & energy - M/M change0.2 %0.2 %0.1 % to 0.2 %0.0 %
PPI -Yr/Yr change-1.6 %-3.6 %
PPI less food & energy - Yr/Yr change3.9 %3.8 %

Highlights
The producer price index in March came in very soft due to lower energy prices. The overall PPI fell 1.2 percent after firming 0.1 percent in February. The March drop was well below the consensus forecast for a 0.1 percent rise in the headline PPI. The core PPI rate eased to no change after a 0.2 percent boost in February. The latest core number was lower than market expectation for a 0.2 percent increase. The latest headline number was pulled down by an unexpected fall in energy costs. Energy fell 5.5 percent after a 1.3 percent gain in February. Food declined 0.7 percent after dropping 1.6 percent in the prior month.

Major component moves were by gasoline, which fell a monthly 13.1 percent in March while heating oil dropped 13.2 percent. Declines in food prices were widespread. Light trucks declined 0.4 percent and passenger car prices dipped 0.2 percent.

For the overall PPI, the year-on-year rate fell to minus 3.6 percent in March from down 1.6 percent the month before (seasonally adjusted). The core rate slipped to up 3.8 percent from up 3.9 percent in January.

Today's numbers should be good for bond prices, easing yields. A weak retail sales report this morning also should help soften yields and weigh on equities. Stocks will have a quandary focusing on Goldman's good earnings after close yesterday and the weak economic news this morning.

Recent History Of This Indicator
The producer price index in February rose a modest 0.1 percent, following a 0.8 percent boost in January. Meanwhile, the core PPI rate eased to 0.2 percent rise after a 0.4 percent increase the prior month. For the headline number, the slowing was primarily due to a 1.6 percent drop in food prices. Energy increased 1.3 percent after a 3.7 percent boost in January. Looking ahead, a rebound in oil prices is likely to boost the headline PPI in March.

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
 
 

2009 Release Schedule
Released On: 1/152/193/174/145/146/167/148/189/1510/2011/1712/15
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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