- by New Deal democrat
I don’t normally pay that much attention to producer prices. Back in the day, producer prices used to lead consumer prices by several months or more. But since the turn of the Millennium, and in particular with “just in time” inventory management, somewhat attenuated since the pandemic, producer prices and consumer prices have risen more or less in sync.
But at very least producer prices as reported for last month confirm continuing inflationary pressures, with final demand prices (gold) rising 0.3% for the month, although raw commodity prices (red) declined by -0.2%, as compared with headline consumer prices (blue), which earlier this week were reported up 0.5%:
On a YoY basis, final demand prices were up 6.5%, and commodity prices up 12.8%, vs. an estimated 4.0% for consumer prices:
Decomposing producer prices further into prices for goods (purple) vs. services (orange), the former rose 0.5% and the latter rose 0.2%:
Note that on a monthly basis, for most of this year producer goods inflation is as bad as it was during the post-pandemic bottlenecks, while producer services inflation is up much less. On a YoY basis, the former is up 10.2%, and the latter up 5.0%:
Again, I don’t think this gives us a lot of predictive informatioin like it might have once upon a time. But at very least it confirms that there is widespread inflation at all levels, and to the extent there may be a leading/lagging relationship, I would worry that goods inflation has been spreading to services, and might further show up in the next several months in consumer prices as well.
Next week we’ll begin to get the November regional Fed reports, which will give us considerably more insight into whether further consumer price hikes are on the horizon.
