Producer Price Index in the US Keeps Declining

The producer prices in the US keep declining in May, albeit not as rapid as the previous month. The producer price index (PPI) declined by 6.1% y/y compared to 8% y/y drop in April. In the past 12 months there was only one month, January 2020, when the yearly change in PPI was positive: 0.1% y/y. 

The falling producer prices, whose decline is close to a double-digit rate, are suggesting subdued demand against the background of COVID-19 causing a freeze in economic activity. Further, the PPI dynamic might be an early predictor of consumer inflation, which is still positive in the US. The US Bureau of Labour Statistics reported 0.12% y/y consumer inflation in May.

Further data and analysis on the US economy could be found on the CEIC US Economy in a Snapshot Q2 – 2020.