The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.4% in October, as prices for finished wholesale goods increased 0.3%, while margins of final services providers increased by 0.5%. This followed a September report that indicated the overall PPI had increased by 0.4%, as prices for finished wholesale goods increased 0.7%, while margins of final services providers increased by 0.4%
The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.3% in December as prices for finished wholesale goods increased 0.7%, while margins of final services providers increased by 0.1%. This followed a November report that indicated the overall PPI had increased 0.4%, with prices for finished goods up 0.2% while final demand for services rose 0.5%, and an October report that indicated the PPI was unchanged, with prices for finished goods up 0.4% while final demand for services fell 0.3%.
The seasonally adjusted Producer Price Index (PPI) for Total Final Demand unexpectedly increased by 0.3% in November as prices for finished wholesale goods fell by 0.1%, while margins of final services providers were 0.5% higher.
The Producer Price Index, or wholesale inflation, did not change, or zero for August 2011 finished goods. Food trumped gas as foods increased 1.1% while gas dropped -1.0%. Core PPI, which is finished goods minus food and energy, increased 0.1% and is the 9th month in a row for an increase. While this is wholesale, tire shoppers beware, 20% of core's increase was tires, up 1.4% from July.
Producer prices for finished goods declined (-2.8%) on a non-seasonal basis in October, a much greater decrease than expected. On a year-over-year basis, the rate of producer price inflation has declined from 9.8% in July to 5.1% in October. We can expect this decline to continue when this month's number is released in a month, because producer prices had increased 2.6% in November 2007 alone.
This is a slice of good news. Typical post-WW2 recessions have ended at roughly the time when both the rate of producer price and consumer price inflation are declining (check), producer prices are declining faster than consumer prices (almost certainly check), and producer price inflation is less than consumer price inflation (not yet, but maybe in a month). That means producer profits margins are increasing, which makes business expansions more likely.
Cross your fingers that the decline isn't simply measuring our trajectory towards a full-fledged deflationary spiral.
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