US PPI Inflation – A little more on this topic just to highlight how deflationary PPI inflation is currently. The start of the Fed's rate cut cycle in March 2024 seems virtually certain.
Figure 1 simultaneously compares the annual and 3-month (annualized) change for headline PPI, core PPI, super core PPI, headline CPI and core CPI.
If the data series moves downwards over time, it means that the 3-month inflation rate is decreasing.
If the data series moves to the left, it means that the annual inflation rate is decreasing.
Ideally, the data series is moving towards the inflation target, defined here as a rate below 2%.
In the case of headline PPI: the 3-month rate was -4.79% in December, and the one-year rate was +0.98%.
In the case of core PPI: the 3-month rate was -0.83% in December, and the annual rate was +0.98%.
In the case of super core PPI: the 3-month rate was +1.00% in December and the one-year rate was +2.51%.
Figure 2 shows the yearly changes in headline PPI, core PPI and super core PPI.
Meanwhile, Figure 3 shows monthly changes in headline PPI, core PPI and super core PPI (in this case, these are seasonally adjusted series).
In the case of monthly headline PPI, we have strong deflation for the last 3 months, and in the case of core PPI, no inflation at all. Only in the case of super core, the monthly change in December slightly rebounded and amounted to +0.22%.
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