Inflation marches on, per the latest producer price increase.

Harry Le Hermit

Harry Le Hermit

Member
If anyone is interested, the PPI (Producer Price Index) was released this morning. The good news to chew on, is the producer cost of food was flat on the month. The bad news making it tough to swallow... the entire producer cost of food has not been passed on to the consumer. (CPI is tomorrow). Obviously, we will have to cough up more money for groceries in the coming months. Exactly how many, is difficult for me to sink my teeth into.
 

I don't understand the charts in the link, to be honest, and will wait for expert analysis. From a practical standpoint, other SFers and I have been reporting 10% or greater grocery price increases over the past year, gasoline prices up 25% - 30% at the pump and winter heating costs likely to also ratchet up, home price increases to stratospheric levels and rental increases likely to follow, used and new car prices up considerably, ditto home repair and construction costs.

I'm fortunate that my budget can absorb these price increases. Sad to say, many families and seniors cannot.
 
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Not sure what happened, but it seems I have a thumbs up on title change.
Previously, there was a post mentioning how much inflation there had been in groceries. (or maybe it is my imagination).

So to clarify, PPI for food, indicates producer inflation at 16% since October of last year and near flat from September of this year. Since February, 2020, the PPI for food, indicates a 23.3% rise. The consumer inflation to this date, does not show such a rise, which indicates the full cost has not been passed on... as yet. The lead time on final grocery pricing is longer than gas stations, which seem to raise instantly.

How much will show up in tomorrow's CPI report is not known to me, although the overall CPI is expected to show a very healthy 5.7%~5.8%.
 

Harry Le Hermit said:
CPI is expected to show a very healthy 5.7%~5.8%
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It was an even healthier 6.2%. WOW. The CPI. If it misses the November forecast by this much, we would be in 7.0% yoy territory. (Forecasted November: 6.3%~6.9%).

The only glimmer in the report in my opinion, is the medical expenses have been nearly flat over the past year. (CPI is a reflection of what is being spent by the consumer - out of pocket, whether cash, credit, etc.)

What is further troubling is the Real Earnings. As the "troubles" began, real earnings rose substantially, due to the mixture of the workforce. This was succeeded by those workers returning to the workforce and the decline of real earnings back to near the beginning of the "troubles". It hit bottom this past June and began to rise... until now. (Real earnings is accounting for inflation).

Finally, the CPI might not reflect your own personal situation, which was never intended. It is a snapshot of the nation, based on Consumer Expenditure surveys and diaries of approximately 10K households scattered across the country. Roughly 1 per 15K households.
 
StarSong said:
I don't understand the charts in the link, to be honest, and will wait for expert analysis. From a practical standpoint, other SFers and I have been reporting 10% or greater grocery price increases over the past year, gasoline prices up 25% - 30% at the pump and winter heating costs likely to also ratchet up, home price increases to stratospheric levels and rental increases likely to follow, used and new car prices up considerably, ditto home repair and construction costs.

I'm fortunate that my budget can absorb these price increases. Sad to say, many families and seniors cannot.
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I don't really understand the charts either, but the puns are nice.
 
Not exactly on topic with the original post in this thread, but it is sort of and/or kind of related to inflation.
I may be flawed, as I like nothing more than reading a report while drinking coffee. Up this time is the Census Bureau's Retail Trade Reports. It requires downloading the .XLS file.

Yessiree, the report indicates robust sales up 1.7%, even though it is in current dollars. Adjusting for inflation, the numbers are still quite positive (0.8%) and continues an upward trend (minus inflation) the past 4 months. Basically... no indication that inflation is inhibiting spending. "Stuff" being bought is increasing. There is an element in our society that would consider this a good thing. We might not be part of that element.

Obviously gasoline at 8.5% of purchases would push up the numbers, and the surprising increase (at least to me) in consumption did a tad more. Other gainers were the e-tail trade which was up nearly 4% in current dollars; followed closely by Electronics and Appliance stores; and Building material & garden eq. & supplies dealers.

Down the list and near flat or below, would be the Health & personal care stores; Clothing & clothing accessories stores; and Furniture & home furn. stores. Restaurants and bars seemed to have flattened out in this report.

Next up will be the Core PCE on the 24th.
 
I saw Janet Yellen talking about this.

The belief is that people are still at home buying stuff due to COVID and that is creating a lopsided shift in spending.

The theory is that when people feel more comfortable with getting out spending will shift to entertainment, sports, travel, dining, etc... and things will begin to balance out.

I’m wondering if things will swing too far for a while and create a slump for the folks that produce and sell stuff.

All of this has little direct impact on me but it is interesting.
 
Aunt Bea said:
I’m wondering if things will swing too far for a while and create a slump for the folks that produce and sell stuff.
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That is definitely a worry, although that would cause a bit of slowdown in upward pricing, which in turn would validate the term "transitory".
 
Can mostly close the books on October inflation data with this mornings release. A word of caution about confusing "current" with "chained". In either case, more stuff is being bought with less money. The Dallas FED also released the "trimmed mean PCE". It basically provides the Federal Reserve with another avenue to avoid any major shifts in policy, imo.
 

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