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US Producer Prices Continue Their Descent

In a consistent trend not seen since 2020, the producer price index (PPI) for final demand has decreased by 0.1% for the third consecutive month. The core PPI, which excludes volatile items like food and energy, remained relatively stable for the third month in a row, increasing by 1.8% annually, the most modest rise since late 2020.


Lower energy prices were the key driver behind the headline decline in the prices of producer goods, while service prices remained unchanged.


Our Take: Overall, this is good news as it indicates continuing disinflation. However, it is primarily driven by lower energy prices. Given the ongoing tensions in the Red Sea, this trend could quickly reverse. Therefore, it's unlikely to have a lasting impact on the Federal Reserve's rate decisions for 2024.


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