PPI less than expected but PCE plug-ins higher

The February PPI was unchanged. That was well below the estimate of a .3% increase but mostly offset by a two tenths upward revision to January to a .6% gain from .4% initially. The core rate was lower by one tenth m/o/m vs the estimate of up .3%, partly mitigated by also a two tenths upward revision to January to up .5%. Versus last year, headline PPI is still up 3.2% y/o/y vs 3.7% in the month before. The core rate is higher by 3.4% vs 3.8% in January.

The drag on the headline figure was the 1.2% drop in energy prices and which are down 3.7% y/o/y. Food prices though were higher by 1.7% m/o/m and by 5.9% y/o/y, in part due to higher egg prices, up 54% y/o/y. Goods prices ex food and energy were up by .4% m/o/m and continuing to point to a bottoming in goods prices. They are up now 2.1% y/o/y and this is before the tariffs and the recent jump in commodity prices.