It's The Economy Stupid: Inflation?

Inflation?  Not so much.  At least no on the producer level.  But it did come in hotter than economists expected

 

Economic Event	Period	Economic Survey	Actual Reported	Original Prior	Revised Prior
Producer Price Index MoM	SEP	0.8%	1.1%	1.7%	1.7%
PPI Ex Food & Energy MoM	SEP	0.2%	0.0%	0.2%	0.2%
Producer Price Index YoY	SEP	1.8%	2.1%	2.0%	2.0%
PPI Ex Food & Energy YoY	SEP	2.5%	2.3%	2.5%	2.5%

 

 

Wholesale prices in the U.S. rose more than forecast in September, reflecting a jump in fuel costs that failed to trickle down to other goods.

 

The PPI (Producer Price Index) climbed 1.1 percent after a 1.7 percent gain in August. The median estimate of economists called for a 0.8 percent increase.

 

Look at PPI Ex Food & Energy’s Month on Month number.  0.0%  The so-called core producer inflation, which excludes volatile food and energy prices, was unchanged, the first time it didn’t increase since October 2011.

 

Facing a global economic slowdown, businesses may have difficulty passing higher energy costs onto customers, keeping a lid on prices. In addition, weak demand from abroad and in the U.S. will probably prevent the cost of raw materials from flaring, limiting inflation pressures and probably allowing the Federal

Reserve to focus on jump-starting employment growth.

 

The increase in the producer price index was led by a 4.7 percent jump in energy prices. The cost of gasoline climbed 9.8 percent, while diesel fuel surged 9.2 percent, the most since December 2010.

 

The moral of this story.  If you don’t drive and don’t eat there’s no inflation.

    

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury