Release Explanation: The rate of inflation of manufacturers when purchasing Goods and Services; the rate of Inflation at the factory Gate. Economic impact An increase in the price of raw Goods and services usually gets passed on to the consumer, therefore this is the first stage on Retail Inflation. This can go on to affect CPI, Retail Sales and Consumer Confidence. This is an inflationary report and therefore is a pre-cursor to CPI data.
Trade Desk Thoughts: Producer prices in the U.S. rose 0.8% in January, the Labor Department said today, following declines of 1.9% in December and 2.5% in November. For the year to January, prices decreased by 1.0% after decreasing by 0.8% in the year to December.
Energy costs led the way with an increase of 3.7%. Costs related to energy had decreased by 9.1% in December. The index for gasoline increased 15.0% after dropping 26.2% in the preceding month.
Import prices declined in yesterday's report, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. Today's report indicates producers are raising prices faster than their foreign competitors, a situation that is unlikely to last given the present economic conditions.
The decline in the index for finished consumer foods slowed to 0.4% in January from 1.4% in the prior month. The index for materials for durable manufacturing moved down 3.5% in January following a 7.2% decrease in December while the index for materials for nondurable manufacturing edged up 0.1% in January after decreasing 9.1% in December. The index for materials and components for construction moved down 0.7% after falling 1.2% in December.
Forex Technical Reaction: S&P futures were recently moving 1.28% higher and the dollar was gaining against the major currencies. The trend continued after the report was released.
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