The Producer Price Index missed expectations across the board: Even services have been weak.

This morning the BLS released its report on the Producer Price Index for December 2019.

Key PPI Points

  • The Producer Price Index for final demand edged up 0.1 percent in December, seasonally adjusted. On an unadjusted basis, the final demand index moved up 1.3 percent in 2019, after a 2.6-percent advance in 2018.
  • The December increase in the final demand index was the result of a 0.3-percent rise in prices for final demand goods. The index for final demand services was unchanged.
  • Prices for final demand less foods, energy, and trade services inched up 0.1 percent in December following no change in November. In 2019, the index for final demand less foods, energy, and trade services climbed 1.5 percent after advancing 2.8 percent in 2018.

Final Demand Goods: The index for final demand goods rose 0.3 percent in December, the same as in November. Most of the increase in December can be traced to a 1.5-percent advance in prices for final demand energy. The index for final demand goods less foods and energy edged up 0.1 percent. In contrast, prices for final demand foods moved down 0.2 percent.

Final demand services: Prices for final demand services were unchanged in December following a 0.3- percent decrease in November. In December, a 2.7-percent advance in the index for final demand transportation and warehousing services offset a 0.3-percent decline in margins for final demand trade services and a 0.1-percent decrease in the index for final demand services less trade, transportation, and warehousing. (Trade indexes measure changes in margins received by wholesalers and retailers.)


  • The Econoday PPI consensus was 0.2% for the PPI and also 0.2% for the PP less food and energy. Both rose 0.1%.
  • Yera over year, the Econoday consensus was 1.4% for PPI excluding food and energy vs a reported measure of 1.1%.

Crude Daily Chart

Despite a 21% rise in the price of crude between October 1 and December 31, the PPI could gain no traction.

Crude Monthly Chart

Crude finished 2019 roughly 38% higher than the start of the year. But there was a plunge 44% plunge between October 2017 and the December 2017 low.

Little Pass Through

Other than energy, there has been little commodity inflation at the producer level. And services have had no traction since of July of 2019.

This material is based upon information that Sitka Pacific Capital Management considers reliable and endeavors to keep current, Sitka Pacific Capital Management does not assure that this material is accurate, current or complete, and it should not be relied upon as such.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex Analysis

Editors’ Picks

EUR/USD under pressure below 1.1100 as US dollar rebounds

EUR/USD remains under pressure below 1.1100 amid the broad US dollar rebound. US President Trump's decision to extend lockdown to tackle the coronavirus outbreak intensified risks of a deeper economic slowdown and underpinned the haven demand for the greenback. 


GBP/USD: Rebound remains capped by 1.2400 amid firmer US dollar

GBP/USD is off the lows but the upside attempts remain capped by 1.2400 amid a broadly stronger US dollar. The dire warnings on the UK’s economic growth amid expectations of a longer lockdown weigh on the spot. 


Cryptocurrencies: Bulls try to take the reins again, XRP in front

The XRP/USD pair is best positioned to escape the bearish trap that has gripped the market in recent weeks. Ether needs to do better than BTC, as it has happened over the weekend. Market sentiment is at a negative extreme, an invitation to a short-term upward shift.

Read more

Gold remains confined in a narrow range around $1620 level

Gold extended its sideways consolidative price action and remained confined in a four-day-old trading range through the early European session on Monday. A goodish pickup in the USD demand seemed to be a key factor capping gains.

Gold News

WTI: Bears dominate below 13-day-old resistance trendline

While following a short-term falling trend line resistance, WTI drops to $22.000 amid the early Monday. In doing so, the energy benchmark remains near multi-year low amid the bearish MACD. $20.00 becomes the key for sellers ahead of targeting the three-week-old descending trend line.

Oil News

Forex Majors