Producer Price Index Preview

The Bureau of Labor Statistics (BLS) is set to release the Producer Price Index (PPI) at 8:30 a.m. ET. The consensus estimate is for a rise of 0.3 percent, with a consensus range of .01 to 0.4 percent. PPI less the more volatile food and energy components is expected to show a more muted increase of 0.1 percent. The PPI measures the average change over time in the prices received by domestic producers of goods and services, with PPI measuring price change from the perspective of the seller. Last month's PPI 0.5 was the highest reading since the third quarter of 2012, and the year-over-year percentage change showed an increase for the first time since April 2014. In the current slower economic growth environment, higher prices may be a welcome sign of burgeoning life in the economy. The PPI measures prices at the producer level before they are passed along to consumers, and many times will anticipate inflationary pressures in coming months. The ability to pass along price increases depends on the strength of the economy and the ability of consumers to shoulder higher prices. In front of the release, S&P 500 futures are trading relatively flat.