The producer price index (PPI) turned negative in February, declining by 0.6%, as crude Oil started to decline that month, which affected producer prices. In March the decline was by 0.2%, while in April prices fell by 1.3%. PPI was expected to turn positive in May, increasing by 0.1%. Producer inflation did turn positive and it beat expectations, growing by 0.4% last month. Although, if we strip out food and energy which leaves us with core PPI, it shows that core PPI still declined by 0.1%. Below is the May PPI report:

US May PPI Report

• May PPI +0.4% vs +0.1% expected
• April PPI was -1.3%
• Ex food and energy -0.1% vs -0.1% expected
• Ex food, energy and trade +0.1% vs -0.1% expected
• PPI YoY -0.8% vs -1.2% exp
• Ex food and energy YoY +0.3% vs +0.4% exp
• Ex food, energy and trade YoY -0.4% vs -0.6% expected

So, core CPI remained negative, but the core core CPI which also takes out trade prices, came at 0.1%. PPI YoY remains negative at -0.8%, but it also improved from last month. Core PPI YoY ticked lower but remains positive at 0.3%, so it seems like prices are starting to increase as Oil also recovers from the crash in April.