Strong Headline and Core Metrics, But PCE Components Appear Softer vs CPI

Headline final demand PPI printed at its highest SA monthly rate since August '23 in January, with the unrounded 0.33% M/M print easily overshooting the 0.1% M/M consensus (vs -0.15% prior after Wednesday's revisions).

• The core metrics overshot consensus by a larger margin. PPI ex-food and energy at 0.50% M/M (vs 0.1% cons, -0.06% prior) brings the 3mma annualised rate to 2.42% (vs 0.56% prior). Perhaps the one encouraging factor is the 6mma annualised rate, which still moderated a touch to 1.61% (vs 1.75% prior).
• Excluding food, energy and trade, both the 3mma and 6mma annualised rates rose in January. The former to 3.50% (vs 1.41% prior) and the latter to 2.99% (vs 2.30% prior).
• The most scrutinized areas though will be those that feed into the Fed's preferred measure of inflation: PCE.
• At a first glance, airfares and vehicle insurance both appear soft relative to Tuesday's CPI counterparts, while medical services seem similarly high.
• Recall that sell-side analyst expectations for core PCE ranged from 0.24-0.34% M/M post-CPI Tuesday. We will provide an update on changes to analyst's core PCE forecasts following today's PPI data in due course.