- by New Deal democrat
Much of the commentary on yesterday’s CPI report suggested that the tariff impacts were apparent. My own analysis was more cautious. That’s simply because we don’t know for sure which items were affected by tariffs, and at this point referring to, e.g., appliances that showed relatively large monthly increases in prices is speculative - not wrong, mind you, simply speculative. The closest to rigorous analysis I read was that goods inflation was more than services inflation, which would make sense because few “services” can be imported.
That issue continued into this morning’s report on June producer prices.
Headline PPI was reported this morning to have been unchanged for June, while that for raw commodities increased 0.6%. Still, as shown by the below, the YoY trend in each is hardly that of accelerating inflation. Final demand PPI was up 2.4% YoY, continuing its cooling trend, while that for commodities was up 1.7%, in line with its trend for the past 12 months:
When we divide final demand into goods and services, the picture becomes a little more complex, in line with the analysis of yesterday’s CPI. Producer prices for services rounded to unchanged, while producer prices for final demand goods increased 0.6%. Still on a YoY basis, the trend for services continues to decline, up only 2.7%, the lowest since March of last year, while that for goods was up 1.7%, in line with its recent trend:
One piece of data is incontrovertible, however.
Every day the Department of the Treasury updates its website with a “Treasury Statemeent” of moneys incoming and outgoing from the federal government. And one specific line is for “Customs and Certain Excise Taxes.”
That particular line as of several days ago indicated that about $125 Billion had been received in such taxes this fiscal year, about $50 Billion more than had been received one year ago at this time.
That $50 Billion was paid by importers, who either ate the cost or passed it on to consumers, or some combination of the two. If we simply figure a 50/50 split between the two possible parties bearing the brunt of the tariffs, that averages out to about a $200 increase per household so far this year. That’s money that could have been saved, or spent on other items. Instead it was spent on the increased cost of items bought.
So even if the data from yesterday’s CPI report was ambiguous, the simple necessary fact is that there have already been increased costs at the producer and/or consumer levels from tariffs. We just don’t know exactly where within those reports they exist.
