The BLS just released September PPI data. Let’s take a look.
Please consider the much delayed BLS Producer Price Report for September.
Final Demand Month-Over-Month
- Final Demand: 0.3 Percent
- Goods: 0.9 Percent
- Food: 1.1 Percent
- Services: 0.0 Percent
- Excluding Food and Energy: 0.1 Percent
- Energy: 3.5 Percent
Final Demand Goods
Final demand goods: The index for final demand goods advanced 0.9 percent in September, the largest increase since moving up 0.9 percent in February 2024. Two-thirds of the broad-based rise in September can be traced to prices for final demand energy, which climbed 3.5 percent. The index for final demand foods advanced 1.1 percent, and prices for final demand goods less foods and energy increased 0.2 percent.
Sixty percent of the September rise in the index for final demand goods can be traced to prices for gasoline, which advanced 11.8 percent. The indexes for meats, residential electric power, natural gas liquids, motor vehicles and equipment, and ethanol also moved higher. In contrast, prices for fresh and dry vegetables declined 1.8 percent. The indexes for nonferrous metal ores and for residual fuels also fell.
Final Demand Services
The index for final demand services was unchanged in September after decreasing 0.3 percent in August. In September, price advances of 0.8 percent for final demand transportation and warehousing services and 0.1 percent for final demand services less trade, transportation, and warehousing offset a 0.2-percent decline in margins for final demand trade services.
Within the index for final demand services in September, prices for airline passenger services advanced 4.0 percent. The indexes for food wholesaling, chemicals and allied products wholesaling, deposit services (partial), and furniture retailing also moved higher. Conversely, margins for machinery and equipment wholesaling decreased 3.5 percent. The indexes for automobile retailing (partial); apparel, jewelry, footwear, and accessories retailing; portfolio management; and long-distance motor carrying also declined.
PPI Final Demand Year-Over-Year
PPI Final Demand Year-Over-Year
- Final Demand: 2.7 Percent
- Goods: 3.3 Percent
- Food: 4.0 Percent
- Services: 2.5 Percent
- Excluding Food and Energy: 2.6 Percent
- Energy: 3.8 Percent
The Goods-Services Tradeoff
Excluding food and energy, the month-over-month increase was only 0.1 Percent
Given that services are about two-thirds of the PPI, the Fed is happy with falling services and rising goods vs the other way around.
The bond market was happy.
Long-term yields dropped 5 basis points. The 30-year long bond yield is down to 4.655 percent. The 10-year note yield is 4.003.
All things considered, this report was a breather. The odds of a Fed rate cut on December 10 are back up to 84.4 percent.
They can’t lower interest rates. It’ll blow up the Yen carry trade. Which is the supposed basis of the stock market bubble. But you say the Fed and the banks that own and control it, can print as much money as they like and buy stocks with it?
I say it’s either the stock market or the dollar.
Gasoline prices were $2.96 the day of the dis-lection and now they are $3.29 thanks to the tariffs on Canada which were cancelled? but apparently they did not get the memo and started shipping more crude to China.
Meat has gone parabolic! literally up 100%.
Although I shot over to Philadelphia over the weekend and prices varied to as low as $2.99. Premium was .50 cents cheaper than my home market.
At my local Costco in NW ATL, I recently purchased for $2.49.
Over here in Chicago’s burbs, with my “fixed $100 item list”:
— Food items a little more expensive than a few months ago, but still about 15% or so lower than during Biden’s highest months.
— Coffee way up, and I consume tons. But there’s large discrepancies (different batches and months of import?) between Walmart, Amazon, etc. Amazon is the weakest in controlling prices of such packaged items, due to its 3rd party sellers. It has become a rip-off.
— Electricity way up. Data centers, electric cars, more people living by themselves instead of families (a factor not many talk about).
— Gasoline (“silver”) quite lower than during Biden, it’s a small relief though.
— Casual clothes are up by at least 25-30%. Tariff effect I guess.
— Restaurants: I don’t go to restaurants. It takes knowledge of food storage and cooking to become a professional chef and not to poison your customers little by little every day. Jumping the border fence and claiming you can cook by throwing half-rotten meat marinated with carcinogens on a dirty grill surface is unacceptable.
That’s not something that market forces can solve (sorry libertarians), because the consumers are clueless and inexperienced on the topic.
— Taxes and home insurance in my area, although the cheapest in taxes suburb in the region, have gone outrageously high over the past 10-15 years.
My electricity rates are going up double digits in January.
This is not “inflation” though as it’s due to supply and demand factors and not currency shenanigans.
Hundreds of data centers are sucking up all available electricity supply and straining the system to its limits. They demand more power, so everybody pays more.
The national power infrastructure needs to be upgraded because of them, and residential customers will help fund that.
Personally, I have no problem paying higher electric bills because I’m sure some of that AI wealth will trickle down to me eventually. /s
I live in Florida. My utility bills are reasonable and I haven’t done anything to the house for energy efficiency. But an oak tree in our front yard has finally matured and provides a lot of shade onto the house from our western exposure to the setting sun. Our community actually gives away a little tree of your choice for Arbor Day. You have to go online, put in your address and a schematic of your house & yard pops up. You can move the tree around to different areas of your yard and the website calculates your electrical savings for a fully mature tree. Believe me…shade helps a ton (at least in Florida)
Just the opposite of what Scotty Basement with the sidewinder tongue claimed.
3/4 point rate cut !!! Guaranteed. 😉
Pure BS as is typical. Service inflation at zero? Must be April Fool’s day!
> PPI for Goods and Food Blasts Higher…
> The bond market was happy.
“Serfs work longer to eat. Oligarchs happy.”