Producer prices jumped more than expected to start 2024, according to the latest data from the Bureau of Labor Statistics.
- M-O-M: The Producer Price Index for final demand increased 0.3% in January, up from the 0.1% decline in December and the biggest increase since August.
- Y-O-Y: The index for final demand rose 0.9% compared to the same time last year, down from 1.0% in December and the second lowest level in the last six months.
Swing & A Miss. Economists projected a much smaller increase of just 0.1% from December and the slowdown in the year-over-year rate was projected to drop to 0.6%.
Goods & Services. Services continue to be the catalyst for inflation as good prices fell for the fourth consecutive month.
- Goods. The index for final demand goods fell 0.2% in January, a smaller drop than December’s 0.5% decline but the fourth consecutive decline. The year-over-year decline is now 3.8% in January, down from the 2.7% decline in December but smaller than the 4.5% decline in November.
- Services. The index for final demand services moved up 0.6% in January, up from the 0.1% decline in December and the biggest drop since July 2023.
BOTTOM LINE: Until price growth for services start to slow, it is going to be hard to pull down that topline number.