Latest PPI Inflation Reading For January Shows Continued Price Expansion

An inflation report today shows that inflation continues to grow across the U.S. economy in early 2018.

The U.S. Bureau of Labor Statistics reported today that the Producer Price Index (PPI) for final demand increased 0.4 percent in January.

For the year, the final demand index rose 2.7 percent during the 12 month period ending in January.

The final demand index minus food, energy, and trade services rose 0.4 percent in January, the largest increase since increasing 0.5 percent in April 2017.

During the final  12 months ended in January, prices for final demand minus foods, energy, and trade services moved higher 2.5 percent, marking the largest increase since 12-month percent change data were available in August 2014.

Final Demand

Prices for final demand services grew 0.3 percent in January, following a 0.1 decrease in December.

Nearly two-thirds of the increase comes from the index for final demand services minus trade, transportation, and warehousing, which moved higher 0.4 percent.

The index for final demand goods increased 0.7 percent in January, the sixth consecutive increase.

More than 80 percent of the January advance is connected to prices for final demand energy, which jumped 3.4 percent.

Minus food and energy, the index for final demand goods rose 0.2 percent.

Nearly half of the January increase in the index for final demand goods is connected to prices for gasoline, which increased 7.1 percent.

The yield on the 10 yr. Treasury is drawing closer to 3 percent and is currently 2.916 after advancing as high as 2.94 earlier today.

The U.S. dollar is trading lower against the euro today which comes after a spike in the dollar following yesterday’s CPI inflation reading for January that came in higher than expected at 0.5 percent in January and signals that inflation is moving broadly closer to the Fed’s 2 percent inflation target.

Edited and Written By:

John Schweitzer

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