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Largest Yearly Advance in Producer Price Index in History Dating to 2010

The Producer Price Index (PPI) rose 1% from June to July and 7.8% from a year ago, led by services.
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PPI Final Demand Year-Over-Year NSA 2021-07

The Producer Price Index for July shows another leap in inflation.

PPI Highlights

  • The Producer Price Index for final demand increased 1.0 percent in July, seasonally adjusted. Final demand prices rose 1.0 percent in June and 0.8 percent in May.
  • On an unadjusted basis, the final demand index moved up 7.8 percent for the 12 months ended in July, the largest advance since 12-month data were first calculated in November 2010. 

PPI Month-Over-Month 

PPI Final Demand Month-Over-Month 2021-07

Final Demand Services

  • The index for final demand services rose 1.1 percent in July, the largest one-month increase since data were first calculated in December 2009
  • Nearly half of the broad-based advance in July is attributable to margins for final demand trade services, which jumped 1.7 percent. Trade indexes measure changes in margins received by wholesalers and retailers.
  • Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services also moved higher, 0.6 percent and 2.7 percent, respectively. 
  • About 20 percent of the July advance in prices for final demand services can be traced to margins for automobiles and automobile parts retailing, which climbed 11.2 percent
  • The indexes for airline passenger services; hospital outpatient care; machinery and equipment wholesaling; traveler accommodation services; and securities brokerage, dealing, investment advice, and related services also increased. 
  • Prices for portfolio management fell 1.8 percent. The indexes for chemicals and allied products wholesaling and for fuels and lubricants retailing also declined. 

Final Demand Goods

  • The index for final demand goods moved up 0.6 percent in July following a 1.2- percent jump in June. 
  • Leading the July advance in prices for final demand goods, the index for final demand goods less foods and energy increased 1.0 percent. 
  • Prices for final demand energy rose 2.6 percent. 
  • The index for final demand foods decreased 2.1 percent. 
  • Among prices for final demand goods in July, the index for tobacco products increased 2.7 percent. 
  • Prices for gasoline; diesel fuel; gas fuels; consumer, institutional, and commercial plastic products; and eggs for fresh use also moved higher. 
  • The index for beef and veal fell 11.6 percent. Prices for residential electric power and for softwood lumber (not edge worked) also declined. 

Spotlight Energy

PPI Final Demand Year-Over-Year NSA Plus Energy 2021-07

That is the same as the lead chart with energy added. The price of energy is up 33.4% from a year ago.

PPI Percentage Weights

PPI Final DEmand Percentage Weights 2021-02
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Energy is 15.5% of the Goods PPI and 5.0% of the overall PPI.

Services are now leading the way, up 1.1% on the month, the largest increase ever.

CPI Jumps Another 0.5% in July, 5.4% From a Year Ago (No Change)

For discussion of the Consumer Price Index, please see CPI Jumps Another 0.5% in July, 5.4% From a Year Ago (No Change)

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"Inflation is Half Our Mandate"

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I wonder if the Fed still feels that way. 

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