Producer Prices Jump More Than Expected In January

(RTTNews) - Producer prices increased by much more than economists had been expecting in the month of January, according to a report released by the Labor Department on Thursday, with the increase partly due to a modest rebound in energy prices.

The report showed that the producer price index rose 0.8 percent in January following a 1.9 percent decrease in December. The increase marked the first price growth since July and exceeded economist estimates of a 0.3 percent increase.

Despite the monthly increase, producer prices were down 1 percent compared to the same month a year ago, marking the biggest year-over-year decrease in prices since October of 2006. The decrease compares to economist estimates of a 2.4 percent year-over-year decline.

However, the inflation report is not likely to attract much attention in light of the considerable turmoil in the broader economy.

Peter Boockvar, equity strategist at Miller Tabak noted, “Given the broad issues facing the economy, a normally less than important PPI report loses even more of its importance.”

The monthly increase in producer prices was partly due to a 3.7 percent increase in energy prices, which followed a 9.1 percent decrease in December and marked the first increase in energy prices since July. Gasoline prices jumped 15.0 percent for the month.

Excluding the increase in energy prices as well as modest decrease in foods prices, the core producer price index rose 0.4 percent in January after edging up 0.2 percent in December. The increase by the core index also exceeded economist estimates of an increase of 0.1 percent.

On an annual basis, core producer prices were up 4.2 percent compared to the same month a year ago, unchanged from annual rate of growth seen in the previous month. Economists had been expecting the annual rate of core producer price growth to slow to 3.8 percent.

The Labor Department will provide a more complete picture of the inflation environment on Friday with the release of its report on consumer prices in the month of January. Economists expect the report to show a 0.3 percent in prices and a 0.1 percent increase in core prices.

For comments and feedback: contact editorial@rttnews.com

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