US PPI continues to climb higher - Wells Fargo

The annual rate of the PPI index reached the highest level in almost five years in the United States. Analysts from Wells Fargo, point out that it was the four consecutive gain, led by services, however, solid price gains were recorded elsewhere. 

Key Quotes: 

“Accounting for over 80 percent of the headline’s gain, final demand services increased a solid 0.4 percent on the month. Final demand goods prices rose for the sixth consecutive month, up 0.3 percent, largely on higher energy prices. Our preferred measure of core PPI, which excludes energy, food and trade services, also increased 0.3 percent, signaling some acceleration in the underlying trend of core inflation.”

“On balance, pipeline pressures continue to build. Intermediate processed goods increased for the sixth straight month, up 0.4 percent, with the gain tied to price gains outside of food and energy. Unprocessed intermediate goods slipped 0.2 percent, in part, on a 4.3 percent drop in energy materials prices.”

“In short, producer prices were stronger than expected, keeping a rising inflation outlook in 2017 as the base case.”