U.S. producer prices rise robustly in January on rising energy, likely to strengthen further in months ahead

U.S. January producer prices rose robustly, underpinned by rising energy. However, the food component remained flat and the core measure rose more modestly. The producer price index rose 0.6 percent on a sequential basis, as compared with the consensus expectations of a rise of 0.3 percent. The producer price index, stripping energy, food and trade, was up a modest 0.2 percent sequentially.

The PPI’s goods component rose 1 percent sequentially, driven by a rise of 4.7 percent in energy prices. Food prices remained flat, while the other goods components were up more modestly. Services PPI rose 0.3 percent sequentially, as rises in transport, trade and warehousing prices countered the declines in the other category.

The yearly change in producer prices steadied around neutral levels in early 2016 and has picked momentum considerably since last summer, rising 1.6 percent year-on-year in January. Final demand, excluding energy, food and trade services also rose 1.6 percent year-on-year.

The PPI personal consumption rose solidly at 0.7 percent sequentially and 1.6 percent year-on-year. Stripping energy and food, personal consumption rose 0.4 percent month-on-month and 1.2 percent year-on-year. The January data is in line with further progress towards strengthening pipeline pressures, with energy prices still playing a considerable role, while the impulse from food prices was not a driving factor in January, noted Barclays in a research report.

“Excluding the volatile component, PPI also remains on solid footing. As the drag from volatile components wanes further, we expect PPI to strengthen in the coming months”, added Barclays.

At 6:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 15.744. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex