Producer Price Index for June 2022

 

Time for more painful inflationary discussion. The BLS has now released the June Report. (historical releases)

The Producer Price Index for final demand increased 1.1 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 0.9 percent in May and 0.4 percent in April. (See table A.) On an unadjusted basis, final demand prices moved up 11.3 percent for the 12 months ended in June, the largest increase since a record 11.6-percent jump in March 2022.

So yes... okay, gasoline was a factor and those prices are now falling. As someone stated, this is old data and gasoline prices have been falling for 30 days. Except... backing out the energy impact, it is still 8.5%. It was 8.6% last month, so golly, gee, wow... things are improving? /S 

While there does seem to be "some" easing, the outlook going forward is still inflationary. Golly, who could have guessed that?

The various inflation numbers, as it stands now. Pink is higher!!

The U.K. and Canada are not updated for June in this chart, but here goes...

Yep, it is global inflation, but it was mostly the USA (using EU methodolgy)... in August, compared to the EU, with some narrowing of that gap in January. However the gap has narrowed significantly since the war began. It boils down to just another excuse that doesn't hold up over time. 

In August the EU was at 3.4% and using the EU method, the USA was at 6.2%. In January, the USA was at 8.0% using the EU method and the EU was 5.1%. The EU is currently at 8.6% and my estimate of their methodology has the USA at 9.7%. 

Wow, the gap has narrowed sufficiently to say it is a global problem. Let's mix apples and orange to find an excuse that will dazzle the masses. /s

Tomorrow presents us with the Advance Retail Report. I cannot see how it could be positive. Certainly the numbers will "shine", but they are not inflation adjusted. I will attempt to do that.

Producer Price Index for May 2022

 

Once again, it is time to browse through the BLS PPI Report for May. (Historical Page)

The Producer Price Index for final demand increased 0.8 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 0.4 percent in April and 1.6 percent in March. (See table A.) On an unadjusted basis, final demand prices moved up 10.8 percent for the 12 months ended in May.

In May, nearly two-thirds of the rise in the index for final demand was due to a 1.4-percent advance in prices for final demand goods. The index for final demand services increased 0.4 percent.

Prices for final demand less foods, energy, and trade services moved up 0.5 percent in May after increasing 0.4 percent in April. For the 12 months ended in May, the index for final demand less foods, energy, and trade services rose 6.8 percent.

Simple math... the index rose 10.8% in May and the index less foods, energy and trade services was up 6.8%. So guess what rose substantially faster than 10.8% overall... Yep, foods, energy and trade services. I suspect you already knew that, but remember this is PRODUCER prices, not retail. Can you guess what gets passed on to the consumer? Ouch! 

So it is no wonder that people much smarter I, have quickly revised the CPI forecast upward. There is "some" good news, although it can easily be explained away as a blip. Producer Food Prices did pause in May, which is not to say they fell very much. The easy explanation would be demand for cheaper foods may be in play. The beef and veal index, slipped 9.5%, but chickens rose. 

Still looking for that indication that the rapid upward trajectory of Inflation will pause... and it will happen. But when? However, it would be foolish to expect a reversal in pricing, especially in the food area. Demand destruction might come into play for all other items, but food is a tough one to cut back on. 

There seems to be a bit of turmoil in Natural Gas prices, as Freeport now suggests a much longer timeline for a full restart. That has significantly brought down the NatGas futures on the Henry Hub, but that drop is to levels not seen since April or May. Whoopee! 

On to the next report.

Producer Price Index for April 2022

The Producer Price Index as released by the BLS, this A.M. 

The Producer Price Index for final demand increased 0.5 percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 1.6 percent in March and 1.1 percent in February. (See table A.) On an unadjusted basis, final demand prices moved up 11.0 percent for the 12 months ended in April.

In April, the rise in the index for final demand is primarily attributable to a 1.3-percent advance in prices for final demand goods. The index for final demand construction increased 4.0 percent, while prices for final demand services were unchanged. 

Prices for final demand less foods, energy, and trade services moved up 0.6 percent in April after increasing 0.9 percent in March. For the 12 months ended in April, the index for final demand less foods, energy, and trade services rose 6.9 percent.

The final demand annual rate slipped from last month, and the month to month slid to lowest since December of 2020, at 0.518%. 

Not everything was even, as processed foods (consumer) jumped 1.36% MoM. Finished consumer energy goods, slipped ever so slightly. Hard to imagine, but it was true. Not so true for May... at this point. 

Kicking out the energy and food sector, everything else rose 1.03% MoM. (1.1% last month.) Better but not truly encouraging. On a year over year basis... this category stands at 6.9% and last month was 7.1%. November through this report reflected this numbers... 7.0%, 7.0%, 6.9%, 6.7%, 7.1%, 6.9%.

Not exactly indicative of any relief in consumer pricing. I think we can expect some more increases in energy for this month and food appears to be heading up for quite a period of time. 

Maybe Tuesday's retail report will shed more light on direction. 

 

 

Producer Price Index for March 2022

 

The Producer Price Index as released by the BLS, this A.M. 

The Producer Price Index for final demand increased 1.4 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 0.9 percent in February and 1.2 percent in January. (See table A.) On an unadjusted basis, final demand prices moved up 11.2 percent for the 12 months ended in March, the largest increase since 12-month data were first calculated in November 2010.

I wish I could see a silver lining, but with the input costs remaining above the demand stage levels... hard to do.

Supply chain and harbor congestion. It would appear the west coast congestion is easing, but it also appears the backlog has been shifted to east and gulf coast regions. Intermodal is still struggling with congestion and we all have heard the dire warnings of truck driver shortages. 

I can't help but think that just-in-time is dead and has been replaced by just-in-case. Which would mean a whole lot of inventory build-up staring into the potential abyss of consumer pullback in purchasing.

A better view of that, might come with tomorrow's advance retail sales outlook... which will contain numerous revisions.

Producer Price Index for February 2022

 

The Producer Price Index as released by the BLS, this A.M. 

The Producer Price Index for final demand increased 0.8 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 1.2 percent in January and 0.4 percent in December 2021. On an unadjusted basis, final demand prices moved up 10.0 percent for the 12 months ended in February.

In February, the advance in the index for final demand can be attributed to prices for final demand goods, which rose 2.4 percent. The index for final demand services was unchanged. 

The upward track continues, although many areas within the stages are starting to slip behind. Unfortunately the Energy and Food sectors are not among that slippage. 

Energy as in crude oil has slipped back from the $130+ range of a week ago and are now in the $105 range. The national gasoline average soared to $4.35 on March 10th and is tailing off ever so slightly to $4.31 at this point. In theory, the price should fall to $3.95 range over the next 2 weeks. 

However, while gasoline stocks are in the somewhat normal range for this time of year, the upstream crude stocks are below, as well as distillate stocks. Which points to a possible imbalance in crude grades for feedstock, which would point to higher refining costs, or so it would seem to this hillbilly.

In any case, demand will likely pick up going into the summer driving season. Supply v demand.

As for food, beef input costs aren't ramping up as much as other meats, but once again... grilling season is upon us. As for Pork... input costs are running about 25% higher than this time last year. Poultry is even higher. Feed and nutrients are the main drivers, with a potential bird flu outbreak causing some concern. 

The feed issue is being hammered by poor crop conditions over the past couple of years and some of the biggest producers are hampered by bad weather. As some of the exporters have been reducing exports, big importers have gone on a buying binge. 

Then came the invasion. Although you may hear something different in the months ahead. Just sayin...

Tomorrow is retail sales, which will require cutting through a ton of revisions, imo.