The BLS released the PPI report this morning and it’s not good news inflation wise.
PRODUCER PRICE INDEXES – FEBRUARY 2024
The Producer Price Index for final demand rose 0.6 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices increased 0.3 percent in January and edged down 0.1 percent in December 2023. (See table A.) On an unadjusted basis, the final demand index advanced 1.6 percent for the 12 months ended in February, the largest rise since moving up 1.8 percent for the 12 months ended September 2023.
In February, nearly two-thirds of the rise in final demand prices can be traced to the index for final demand goods, which advanced 1.2 percent. Prices for final demand services moved up 0.3 percent. The index for final demand less foods, energy, and trade services increased 0.4 percent in February after rising 0.6 percent in January. For the 12 months ended in February, prices for final demand less foods, energy, and trade services moved up 2.8 percent.
Final Demand
Final demand goods: Prices for final demand goods advanced 1.2 percent in February, the largest increase since moving up 1.7 percent in August 2023. Nearly 70 percent of the broad-based rise in February can be attributed to the index for final demand energy, which jumped 4.4 percent. Prices for final demand goods less foods and energy and for final demand foods also increased, moving up 0.3 percent and 1.0 percent, respectively.
Product detail: One-third of the February advance in the index for final demand goods can be traced to a 6.8-percent increase in prices for gasoline. The indexes for diesel fuel, chicken eggs, jet fuel, beef and veal, and tobacco products also rose. Conversely, prices for hay, hayseeds, and oilseeds decreased 8.3 percent. The indexes for iron and steel scrap and for asphalt also fell. (See table 2.)
Final demand services: Prices for final demand services moved up 0.3 percent in February after rising 0.5 percent in January. Leading the February increase, the index for final demand services less trade, transportation, and warehousing advanced 0.5 percent. Prices for final demand transportation and warehousing services rose 0.9 percent. In contrast, margins for final demand trade services declined 0.3 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)
Product detail: A quarter of the February increase in the index for final demand services can be attributed to a 3.8-percent rise in prices for traveler accommodation services. The indexes for outpatient care (partial); airline passenger services; loan services (partial); securities brokerage, dealing, and investment advice; and alcohol retailing also moved up. Conversely, margins for chemicals and allied products wholesaling fell 6.4 percent. The indexes for automobiles and parts retailing and for services related to securities brokerage and dealing (partial) also decreased.
The Fed meets on March 20th so it will be interesting to see how they view the hot CPI and hot PPI report that have come out recently. We will continue to load up on T-Bills and wait this out so stay tuned, stay profitable and stay solvent…