Following yesterday's much cooler than expected, Goldman's Rich Privorotsky notes that today’s PPI print matters more for the core PCE read-through (Fed's favorite inflation indicator), particularly healthcare and financial services.
While May's headline PPI print was hot, core was cooler than expected, and June's data release today was expected to show no change in headline producer prices.
In fact, like with CPI, headline Producer prices actually saw deflation (-0.3% MoM), equaling the biggest monthly decline since April 2020. The annual pace of producer price gains slowed to 5.5% (well below the 6.2% expected) and May's big jump was revised notably lower also...
While Services remain with modest inflation, Goods are in significant deflation now...
Core PPI (ex Food and Energy) printed +0.2% MoM, cooler than the +0.3% MoM expected, and May's rise was revised notably lower leaving Core prices up 4.7% YoY (vs +54.1% YoY exp)...
Energy was the biggest driver of the headline deflation, but Food and Transportation also saw MoM price declines...
PPI MoM dropped -0.3%, below est of 0.0%, and down from a 0.6% increase in May (revised from +1.1%). PPI rose 5.5% for the 12 months ended in June. Core PPI
