Producer Prices: Further Easing

Bottom Line:  PPI rose modestly in April, as expected, at both the headline and core level as energy and most commodity-related prices rebounded. Still, the rebound was modest, and trends remained firmly toward decelerating price pressures. Final demand services have seen annualized price gains over the last three- and six months of 1.8% and 2.2%, respectively. Margins in transportation and warehousing, a major driver of pipeline inflation for consumer goods, eased sharply again. Overall, headline producer prices have decelerated sharply, down 0.4% over the last three months and up just 07% over the last twelve months, after gains of 6.6% in the calendar year 2022. Core producer prices were running at just 1.9% annualized in the three months that ended in April, down from just under 3.5% in the prior twelve. While there will be volatility and lags for these kinds of readings to come through to consumer prices, the disinflationary trend in producer prices suggests we should continue to see a disinflationary trend in consumer prices.