Preview: Due March 18 - U.S. February PPI - Ex food, energy and trade suggests trend at 0.3% per month
We expect PPI to rise by 0.3% in February, slower than January’s 0.5% and December’s 0.4%. Ex food and energy we expect a rise of 0.2% after a strong 0.8% January increase. Ex food, energy and trade however, we expect a fourth straight increase of 0.3%, which would signal where trend is.
We expect food and energy to see partial corrections from respective January declines of 1.5% and 2.7%. Energy looks set to see a stronger increase in March. Food trend has turned negative in recent months, but bad weather poses some upside risk after January’s decline.
Recent data ex food, energy and trade suggests an underlying trend of 0.3% per month, and that is consistent with inflation remaining above the Fed’s target. Trade prices look set for a correction lower after two straight strong gains that more than fully erased two straight declines. We expect a 0.2% rise in services restrained by trade and a 0.3% rise in goods ex food and energy, the latter slowing from a 0.7% January increase that probably reflected new year pricing decisions.
Despite the slower monthly gains, we expect yr/yr growth to pick up to 3.0% from 2.9% overall and to 3.7% from 3.6% ex food and energy. Ex food, energy and trade however, we expect a slowing to 3.2% from 3.4%.
