Producer Prices for Final Demand Goods Slowed in February, but Up 2.9 Percent Over the Past 12 Months

The Bureau of Labor Statistics reported that producer prices for final demand goods and services rose 0.2 percent in February, easing somewhat from the 0.4 percent gain in January. For manufacturers, producer prices for final demand goods edged down 0.1 percent in February, pulling back from the 0.7 percent increase in January. Energy costs helped to boost January’s jump in input costs, with energy prices up 3.4 percent in that release; in the latest figures, energy fell 0.5 percent. Food prices declined 0.4 percent, drifting lower for the third straight month. On a year-over-year basis, final demand food and energy costs have risen 0.6 percent and 9.3 percent, respectively. Excluding food and energy, producer prices for final demand goods rose 0.2 percent in this report, increasing for the seventh consecutive month.  

Overall, producer prices for final demand goods and services have increased 2.9 percent since February 2017. This was up from 2.6 percent year-over-year in January but down from the 3.1 percent pace in November. In general, raw material costs have accelerated over the past year, with the year-over-year pace being 2.0 percent in February 2017. Recent sentiment surveys have tended to echo this finding, with input prices at multiyear highs in many such reports.

Similarly, core producer prices, which exclude food, energy and trade services, have increased 2.7 percent over the past 12 months, up from 2.4 percent in January. For comparison purposes, core producer prices were 1.8 percent year-over-year at this point last year.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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