Today's U.S. December PPI report undershot estimates
Today's U.S. December PPI report undershot estimates with gains of 0.1% for both the headline and the core that rounded up from respective increases of 0.084% and 0.085%. The December figures are softer than the 0.2% gains expected for both measures. December weakness was due to a flat service sector reading and a -0.2% food price drop, alongside the largely expected 1.5% energy price gain that left a 0.3% goods price rise. The headline y/y PPI gain rose to 1.3% from 1.1%, though the core measure fell to 1.1% from 1.3%. Despite restraint in monthly price gains, analysts're seeing the expected uptrend in y/y PPI gains through February as analysts switch from easy to hard comparisons attributable to last winter's big commodity price drop. The y/y uptrend into Q1 will leaving most inflation metrics oscillating around the Fed's 2% objective, which will make it hard to argue for a "material change" in the inflation outlook. The January inflation reports have proven largely benign beyond the rise in y/y measures, leaving little change to the inflation outlook. Headline PPI gains have mostly undershot CPI gains through 2019, and analysts have a 2019 down-tilt for monthly PPI gains despite a slight up-tilt for CPI gains. For PPI analysts have 6-month average price gains of just 0.085% for the headline and 0.057% for the core that undershoot respective 12-month average gains of 0.106% and 0.100%.