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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)

Meanwhile, Consumer Inflation Expectations Hit a New 8-Year High

"Inflation is Half Our Mandate"

The Fed called price hikes a "Welcome" Rise in Inflation

I wonder if the Fed still feels that way. 

Also note Fed Chair Powell's slip in which he said "Inflation is Half Our Mandate"

The Fed got far more than it bargained for and the economy is overheating.


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