A Producer Price Index Inflation Spike Is On The Way Too

Producer Price Index Month-Over-Month April 2020

  • PPI: -1.1%
  • 2020 Goods: -2.8%
  • Services: -0.4%
  • Energy: -17.3% 

Producer Price Index Month-Over-Month February 2021

  • April 2020 PPI: 0.5%
  • April 2020 Goods: 1.4%
  • April 2020 Services: 0.1%
  • Energy: 6.0%

Q: Why does Energy have such a small impact on the PPI?
A: The following chart explains. 

PPI Final Demand Weights 

Energy is 15.5% of goods but only 5.0% of the overall PPI. 

PPI Year-Over-Year 

Producer Price Index Year-Over-Year April 2020

  • PPI: -1.5%
  • Goods: -5.2%
  • Services: +0.3%
  • Energy: -30.7%

Producer Price Index Year-Over-Year February 2021

  • PPI: 2.8%
  • Goods: 3.4%
  • Services: 2.5%
  • Energy: 5.5%

What’s Going to Happen?

The year-over-year comparisons in March, April, and May are going to show huge percentage year-over-year jumps, especially April and May due to comparisons vs. the initial pandemic numbers in Spring of 2020.

Services will act as a bit of a stabilizer given they constitute 66% of the PPI, but the energy numbers are so huge they will have a very noticeable impact. 

Consumer Price Index Discussion

For the impact of Covid on the CPI, please see Inflation is Poised to Soar, 3% by June is “Almost Certain”

Mish

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LostNOregon
LostNOregon
3 years ago

Just got back from the Bend, Oregon area. At night, there are so many stars it’s difficult to see the constellations! I only had my binoculars and was trying to find the Andromeda Galaxy. Too many tall trees blocking the view. I will have to get out on the golf course next time to get a better view.

Sechel
Sechel
3 years ago

Surprised this didn’t happen earlier due to Trump’ tariffs. Possible the Pandemic delayed it?

Casual_Observer
Casual_Observer
3 years ago
Reply to  Sechel

This is going to look more like the K shaped recovery most experts expected. It is going to necessitate raising interest rates by the second half of this year imo. We will get to full employment in 2022 before the midterms. This is all good news for Democrats across the country. This is why Republican states are doing everything they can to limit voting. This is happening in 39 states at last count.

Mish
Mish
3 years ago

Just got back to my room. Up all night photographing the Milky Way . This post was scheduled. Headed to bed.

Eddie_T
Eddie_T
3 years ago
Reply to  Mish

Looking forward to seeing the photos.

Mish
Mish
3 years ago
Reply to  Eddie_T

It will take a while
I have 14 days worth of images I have not even processed yet and countless images I have processed but not posted.

Eddie_T
Eddie_T
3 years ago
Reply to  Mish

My dock at the lake is a great place to stargaze..or was until my neighbor 2 doors down put in a damn automatic security light. I often have thoughts that run to vandalism….

TexasTim65
TexasTim65
3 years ago
Reply to  Eddie_T

Shouldn’t the light be off if it’s automatic? Or do you mean it’s automatic at sunset to sunrise? I installed ones that are automatic at sunset to sunrise but also are motion activated (built right into the bulb now so no extra tech needed and only 10 bucks a bulb) so they at least aren’t on when not needed.

Eddie_T
Eddie_T
3 years ago
Reply to  TexasTim65

This one is as big as a streetlight and it’s on all night, every night. Even when the neighbors aren’t there. It ruins the dark for looking at the stars. I was hoping to talk to them about it and get permission to. maybe turn it off occasionally….but I almost never see them anymore.

TexasTim65
TexasTim65
3 years ago
Reply to  Eddie_T

That’s a big light. Are there that many random boats docking at night to commit vandalism? I remember Lake Travis as being civilized when I lived there (I’m assuming you’re on Travis).

The ones I installed are just the big flood lights for your house.

Eddie_T
Eddie_T
3 years ago
Reply to  TexasTim65

We’re on Lake LBJ…..it’s just a vacation home neighborhood and I expect they’re just trying to be security conscious….but they obviously haven’t given much thought to how anybody else might feel about their beacon, which illuminates my dock pretty well from 100 feet away, with a whole other neighbor’s back yard between us.

yanee
yanee
3 years ago
Reply to  Mish

Awesome. I always encourage friends heading out west to visit the Grand Canyon but with the caveat that I mean at night, all night, staring upwards.

Please post your favorites!

anoop
anoop
3 years ago
Reply to  Mish

milky way used to be one of my favorite chocolates. mars was pretty good too, in case you got any pictures of that.

Scooot
Scooot
3 years ago
Reply to  Mish

I look forward to seeing some. I take Astro images when I get the chance, alas the skies near me aren’t anything like you’ve just experienced. 🙂

Mish
Mish
3 years ago
Reply to  Mish

Massive amount of light pollution from Las Vegas actually. Huge green glow on the horizon. Terrible. Ruined my Milky Way rise shot. Had to wait till it was higher in the sky and rotated from SE to S as the evening wore on. I have a full spectrum camera that records LV as green. Regular camera is yellow. I have seen the low arch described as a rising crescent moon. Nope it’s Las Vegas. Except looking SE the sky is very dark here.

Scooot
Scooot
3 years ago
Reply to  Mish

My bad presumption. That must have been a bit frustrating.

Eddie_T
Eddie_T
3 years ago

Energy costs are more elastic than some other necessaries, within certain limits. And energy price goes all over the place over the medium term. In general, people have cut way back on discretionary use of fossil fuels. I expect demand to fall further if prices stay high.

I have a hard time hating inflation since I built my financial house on the premise that it was inevitable and that I needed to plan for it. I just continue worry about the fragility of the entire system as asset prices skyrocket. But what is happening is something that was not unexpected….it’s just more of a wild ride than I like, at the moment.

Eddie_T
Eddie_T
3 years ago
Reply to  Eddie_T

Meant to say energy DEMAND is more elastic….damn time change. Where is my coffee?

ColoradoAccountant
ColoradoAccountant
3 years ago
Reply to  Eddie_T

I am having coffee now and contemplating the amount of energy I will need to dig out today.

Eddie_T
Eddie_T
3 years ago

I will be in Steamboat Wednesday…I don’t think they’re getting a huge dump, but some fresh snow is expected over the next couple of days. If life gives you snow, go skiing.

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