Producer Price Index for September 2022

Isn't this exciting... the BLS has released the September Producer Price Index Report. (historical releases)

The Producer Price Index for final demand increased 0.4 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices declined 0.2 percent in August and 0.4 percent in July. (See table A.) On an unadjusted basis, the index for final demand advanced 8.5 percent for the 12 months ended in September.

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After two months of declines, it popped back up. The CPI remained flat those two months, so it would not be unreasonable to think tomorrow CPI, to show a gain.

Far greater minds than I have indicated the Food and Energy Index, is moving upwards and sticky prices (core) have become stuck. I mean we have forecasts from really smart people, saying September CPI will advance +0.3% and October at +0.8%. That with core stagnating at +0.5% for each month.

So gasoline is back in the picture, as pump prices are on the rise. The average for October is +3.5%, after falling in July by -7.7%; August by -10.1%; and September at -5.2%. That helped cover up a lot of sins. Supposedly, weaker demand would drive down prices. However, the actual data, points to demand slightly increasing, the past 3 weeks and back to August levels.

Having followed EIA.gov weekly reports on energy for over 15 years, I was amazed at the discrepancies in last week's report. I would expect some wild swings in tomorrow's report. More on that... tomorrow.

Food is near and dear to my heart (Stomach and heart are less than a foot apart, and that is foot in measurements, not that other body part. Less than 30CM.)...

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There does not seem to be much relief in the food category either. The index is up 11.9% from last year, and +1.2% for the month. The latter being +14.4% annualized and not a good indicator of things to come. I would expect the annualized to slip below the year to year actual, for relief to be seen.

What does all this mean? OPEC+ is supposedly dropping production by 2 million BPD, beginning November the 1st., although Russia says they have already done half of that. That 180 million barrel SPR release is slated to end on October 31st. 

Biden has suggested another SPR release, but I doubt it... as he needs to save some ammunition for the 2024 election. The mid terms are November the 8th. 

The advance GDP for 2022 3rd quarter comes out at end of October. However the CPI comes out tomorrow and I cannot help but think, it will be a disappointment for those expecting some dramatic easing (stock markets). 

Possibly the Real Earnings report from tomorrow, might get some positive spin, but still likely not to get back to pre-covid level. 

Retail Sales comes out on Friday and I do not expect happy news either, ONCE you factor the inflation in. This report is always in current dollars, NOT chained dollars or adjusted for inflation.

We have 26 days of political theater, before the mid-terms. Then it revolves around 2024. So prepare to clean your B.S. meter very quickly after November the 8th and possibly consider a major upgrade, with expanded capacity. It will be needed.