Wholesale inflation measure flashes red

Last week, I noted that in January, Consumer Price Inflation (CPI) was running at its highest year over year rate since February 1982. This is the inflation figure most familiar to the average American, but it is only one figure. There is also the Producer Price Index (PPI) which “measures the average change over time in the selling prices received by domestic producers for their output.” Roughly, the CPI measures retail prices; the PPI measures wholesale prices.

And today’s PPI release suggests that America’s current inflationary problems aren’t going to get better anytime soon. The Bureau of Labor Statistics (BLS) reported:

The Producer Price Index for final demand increased 1.0 percent in January, seasonally adjusted…This rise followed advances of 0.4 percent in December 2021 and 0.9 percent in November…On an unadjusted basis, final demand prices moved up 9.7 percent for the 12 months ended January 2022.

The monthly rate was the highest since May 2021 and above the Dow Jones estimate of 0.5 percent. The year over year rate was down from the previous month’s peak of 10.0 percent, but was still higher than in any month between November 2021 and the start of the series in November 2010.

Breaking this down, the BLS reports:

Prices for final demand less foods, energy, and trade services increased 0.9 percent in January 2022, the largest increase since rising 1.0 percent in January 2021. For the 12 months ended January 2022, the index for final demand less foods, energy, and trade services moved up 6.9 percent.

This data gives us an idea of the the price pressures that businesses are facing, and which may well be passed on to consumers, driving further consumer price inflation in the months to come. I wrote in October about how America might be in for higher inflation and, I’m sad to say, the data is bearing that out so far.