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US Producer Prices Tumble Most Since 2009 (And Don't Blame Oil)

US Producer Price Index (ex food and energy) fell 0.5% MoM in February (against expectations of a 0.1% rise) - the biggest drop on record (since 2009).The great news for Americans is that the drop in overall producer prices was led by a 1.6% fall in food prices. Year-over-Year PPI Final Demand has fallen (-0.6%) for the first time on record.

 

Biggest MoM drop on record..

 

As YoY PPI Final Demand dropped for the first time on record...

 

The Full Breakdown

From the report:

Final demand services: Prices for final demand services fell 0.5 percent in February, the largest decline since the inception of the index in December 2009. Leading the decrease, margins for final demand trade services dropped 1.5 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand transportation and warehousing services also moved down 1.5 percent. In contrast, prices for final demand services less trade, transportation, and warehousing rose 0.3 percent.

Product detail: In February, nearly 30 percent of the decline in the index for final demand services can be traced to margins for fuels and lubricants retailing, which fell 13.4 percent. The indexes for machinery, equipment, parts, and supplies wholesaling; food and alcohol retailing; apparel, jewelry, footwear, and accessories retailing; truck transportation of freight; and wireless telecommunication services also moved lower. Conversely, prices for inpatient care advanced 0.6 percent. The indexes for outpatient care (partial) and for TV, video, and photographic equipment and supplies wholesaling also increased. (See table 4.)

Final demand goods: The index for final demand goods moved down 0.4 percent in February, the eighth consecutive decrease. Over two-thirds of the decline in February can be attributed to prices for final demand foods, which fell 1.6 percent. The index for final demand goods less foods and energy inched down 0.1 percent, and prices for final demand energy were unchanged.

Product detail: About a quarter of the decline in prices for final demand goods can be traced to the index for fresh and dry vegetables, which dropped 17.1 percent. Prices for iron and steel scrap, meats, jet fuel, industrial chemicals, and processed poultry also moved lower. In contrast, the index for gasoline rose 1.5 percent. Prices for light motor trucks and chicken eggs also moved up.

Special grouping, Final demand less foods, energy, and trade: The index for final demand less foods, energy, and trade services was unchanged after falling 0.3 percent in January. For the 12 months ended in February, prices for final demand less foods, energy, and trade services rose 0.7 percent.

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And finally, perhaps it's time to rethink this whole "central banker" thing...

 

So much for QE helping The Fed meet its mandate... perhaps, as we have noted previously, The Fed is creating deflationary pressures by enabling mal-investment driven over-supply on a vast scale.