Producer Prices in January – Services Up, Energy Down


The Bureau of Labor Statistics (BLS) released the Producer Price Indexes (PPI) for January. Inflation in prices received by producers (prior to sales to consumers) increased 0.1% in January based on increased prices for services. Prices received by producers for goods declined 0.7% based on another large decline in energy prices. Excluding food and energy, prices for goods rose 0.2%.

Softwood lumber prices ticked up in January but have trended down since mid-2014. Declining overseas demand, notably China, and a strong dollar should keep downward pressure on prices despite increasing domestic demand as the housing recovery continues.

OSB prices ticked down in January after strong gains late in 2015. This may represent a leveling off or normalization as the industry adjusts after the steep rise and fall over the last several years.

Gypsum prices rose in January reversing declines in earlier months. Prices trended down slightly through the end of 2015 after sharp increases earlier in the year. Early year increases followed by slight declines through the year has been the pattern of the last several years as prices have stepped up each year since 2012. Price increases from major gypsum producers (gypsum) in 2016 have already been announced.

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