Producer price index for May 2013

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Producer Price Index

Released On 4/12/2013 8:30:00 AM For Mar, 2013 Prior Consensus Consensus Range Actual PPI - M/M change 0.7 % -0.2 % -0.7 % to 0.5 % -0.6 % PPI -Yr/Yr change 1.8 % 1.1 % PPI less food & energy - M/M change 0.2 % 0.2 % -0.1 % to 0.2 % 0.2 % PPI less food & energy - Yr/Yr change 1.7 % 1.7 %

Highlights The headline number was much weaker than expected but it was almost all related to a fall in gasoline prices. The March producer price index fell back 0.6 percent after a strong 0.7 percent boost in February. Market expectations were for a 0.2 percent decline. The core rate, which excludes both food and energy, increased 0.2 percent after rising 0.2 percent in February. Analysts expected a 0.2 percent increase. Food prices rebounded 0.8 percent after falling 0.5 in February. Energy costs in March dropped 3.4 percent, following a 3.0 percent boost the month before. Gasoline fell 6.8 percent after spiking 7.2 percent in February. Within the core, almost one-quarter of the March advance can be traced to prices for civilian aircraft, which rose 0.7 percent. Also, pharmaceuticals increased 0.4 percent. Key players in the core, passenger car prices gained 0.2 percent while light trucks were flat. For the overall PPI, the year-ago rate eased to 1.1 percent from 1.8 percent February (seasonally adjusted). The core rate held steady at 1.7 percent. On a not seasonally adjusted basis for February, the year-ago headline PPI was up 1.1 percent, while the core was up 1.7 percent.

Market Consensus before announcement The producer price index in February producer price index increased a strong 0.7 percent, following a rebound of 0.2 percent in January. The boost was largely energy related. The core rate, which excludes both food and energy, rose 0.2 percent-matching the prior month's pace. Food prices declined 0.5 percent after jumping 0.7 percent in January. Energy costs in February accelerated to a 3.0 percent boost, following a 0.4 percent decline the prior month. Gasoline spiked 7.2 percent, following a monthly decrease of 2.1 percent in January. Within the core, about 20 percent of the February increase was traced to prices for pharmaceutical preparations, which moved up 0.2 percent. Passenger car prices gained 0.3 percent while light trucks rose 0.1 percent.

Definition The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of indexes that measure the average change over time in the prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. The headline PPI (for finished goods) is a measure of the average price level for a fixed basket of capital and consumer goods for prices received by producers.  Why Investors Care

It is always a good idea to look at more than a few months of data to get a sense of changes in established trends. Monthly changes in the PPI are mainly volatile because of sharp fluctuations in food and energy prices. The core PPI eliminates the sharper fluctuations. Data Source: Haver Analytics

Yearly changes tend to smooth out more severe monthly fluctuations and give a better idea of the underlying rate of inflation. Even with the smoother trend, note that the core PPI does not fluctuate as much as the total PPI. Data Source: Haver Analytics