US: Producer prices expected to increase by 0.2% m-o-m in May - Nomura

Analysts at Nomura point out that the consensus expects an increase of 0.2% m-o-m in May in US producer prices.

Key Quotes

 “Headline PPI increased 0.5% m-o-m in April, with notable advances in energy and food prices. Energy prices rebounded by 0.8% after a sharp decline in March, driven by a rebound in gasoline and residential gas prices. Food prices increased solidly by 0.9% following an increase of the same magnitude in the prior month. In particular, finished consumer food prices jumped strongly by 1.5% after a sharp pick-up in March and placed some upward pressure on food CPI inflation. The PPI index for trade services, which represents the margins received by wholesalers and retailers, fell 0.3%. Excluding volatile food and energy prices, PPI increased moderately by 0.4%.”

“Yet, some of this increase was due to spikes in some commodity groups that appear transitory. Specifically, prices of securities brokerage, dealing, investment advice and related services surged strongly by 6.6% (non-seasonally adjusted). Also, prices of cellular phone and other telecommunication services rebounded strongly after continued declines. Some negative payback to these measures appears unreasonable. In this sense, it is likely to see more subdued growth in PPI excluding food and energy prices. Consensus expects an increase of 0.2% m-o-m in May. For the top-line index, consensus expects a flat reading.”