The Producer Price Index for final demand increased 0.6 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 0.5 percent in September and 0.7 percent in August. (See table A.) On an unadjusted basis, the final demand index rose 8.6 percent for the 12 months ended in October.
That's all and good, but there was a taste of hope (pun intended) in the food index, which was flat for the month to month (actually down -0.4%). The indigestion comes from the realization the consumer price inflation has not kept up with the producer price inflation. So until consumer prices catch up, which could be combined with Producer Price final goods decrease (It is possible as indicated above), the next few monthly reports of CPI could be difficult.
The intermediate goods Producer Price section, indicates that all the increases have yet to be passed on to the final goods section, which is then passed on to the consumer. Oh Joy!! Upstream from that is a whole bunch of stuff that has yet to be passed on to that intermediate thingy.
The final demand costs of most everything else was on the rise, especially energy.
Up tomorrow will be the CPI and Real Earnings.
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