U.S. producer price index likely to have expanded in January, likely to continue with uptrend in 2018

The U.S. producer price index data for the month of January is set to be released this week. The PPI data is expected to have recorded a growth in the month. In December, the PPI had dropped 0.1 percent, marking the first contraction in producer prices since August 2016. It had followed five straight monthly gains.

The drop in December was driven by the first decline in services prices in 10 months. Prices for food had dropped 0.7 percent, whereas trade services had fallen 0.6 percent. Prices for energy were the same on the month. Stripping these components, the PPI had seen a slight gain of 0.1 percent in December and 2.3 percent year-on-year rise.

In spite of December’s headline fall, the PPI had shown strong growth in the whole of 2017. Commodity prices have trended higher in all, while the economy is showing signs of promise behind more job gains and historically high levels in sentiment among both consumers and businesses. Therefore, producer prices are expected to continue their upward momentum into 2018, noted Wells Fargo in a research report. The PPI is likely to have expanded 0.4 percent on a sequential basis, added Wells Fargo.

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