Producer Prices Signal Deflation Risk

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factoryThe Labor Department has released its Producer Price Index (PPI), a measurement of wholesale inflation. In Friday's report, that should probably read deflation. Before you panic about deflation, just keep in mind that oil prices have surged since the end of May and this means that almost certainly you can expect higher producer prices in June.

Producer prices and final demand was down by 0.2% in May, while Bloomberg and Dow Jones were both predicting a gain of 0.1%. Even if you back out the volatile food and energy, the PPI and final demand reading was still a drop at -0.1%. Bloomberg was calling for a gain of 0.1%.

We also have to keep in mind that the PPI for final demand rose by 0.6% in April, preceded by a 0.5% gain the month before.

Equity futures are lower by 2.25 on the S&P 500 and lower by about 23 points on the DJIA. That being said, stocks have still been struggling for direction after an Iraq civil war risk sell-off rattled markets this week.

ALSO READ: Ten States With the Fastest Growing Economies


Filed under: Economy
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