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First Cut: February Final Demand PPI tame at both total and core, year-over-year on trend

The January Final Demand Producer Price Index (PPI) was up 0.1% both for total and the core — excluding food, energy, and trade services. Year-over-year the total PPI was up 1.9% and at the core was up 2.3%. Producers continue to have to deal with somewhat higher input costs and the challenges in passing through those increases to customers.

Food prices were down 0.3% in February, and up 1.6% compared to a year-ago.  Energy was up 1.8% as gasoline and other fuels started their modest way higher, but were still down 6.4% from February 2018. Trade services were down 0.4% from the prior month, but up 2.6% over a year-ago.

The PPI is not the closest-watched of the inflation indicators by the FOMC, but it does provide useful clues about underlying price pressures. So far, upward price pressures from manufacturing and services have remained largely contained outside of short bursts related to trade and tariff policy.

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