The Producer Price Index year-over-year inflation grew from 2.8 % to 3.1 %.
Analyst Opinion of Producer Prices
The Producer Price Index again surged year-over-year. Here is what the BLS said in part:
In November, three-fourths of the rise in the final demand index is attributable to a 1.0-percent increase in prices for final demand goods. The index for final demand services climbed 0.2 percent.
This much gain in the Producer Price Index was not expected – and unless you are the twisted follower of the Fed – this increase is not good economically.
The PPI represents inflation pressure (or lack thereof) that migrates into consumer price.
The market had been expecting (from Bloomberg):
The producer price inflation breakdown:
z ppi1.png
In the following graph, one can see the relationship between the year-over-year change in intermediate goods index and finished goods index. When the crude goods growth falls under finish goods – it usually drags finished goods lower.
Percent Change Year-over-Year – Comparing PPI Finished Goods (blue line) to PPI Intermediate Goods (red line)
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