US: Expect modest PPI inflation - Nomura

Analysts at Nomura point out that US top line producer prices rose 0.4% m-o-m in November, driven by a strong increase in energy prices.

Key Quotes

“Excluding volatile food, energy and trade (wholesalers’ margin), producer prices were up 0.4%. Pipeline pressure on consumer prices appears modest. The inflation of PPI for intermediate goods has been accelerating, in line with steady upward pressure on input prices. However, the prices of finished goods and consumer goods have not responded strongly. Elsewhere, service prices which make up a large share of the PPI rose modestly by 0.2%.”

“We expect service prices to continue rising at a steady pace. As spikes in energy prices caused by hurricanes revert, aggregate PPI inflation will likely return to its previous trend in December. Excluding food, energy and trade components, we expect modest PPI inflation. Note our December CPI forecasts may be subject to revisions based on December import prices and PPI data.”