Robert Hughes’ Post

Oh that stubborn inflation again…. According to a report from the Labor Department this morning, wholesale prices in January increased more than anticipated, adding further complexity to the inflation scenario. The producer price index, which measures the prices received by producers of domestic goods and services, rose by 0.3% for the month. PPI ex food and energy increaed 0.5% Month over month vs +0.2% prior and +0.1% expected . On a YOY basis both the headline and core PPI increased 0.9% and 2.0%, and were higher than the consensus forecasts of 0.6% and 1.6%. The last leg of this inflation marathon will be a long one as we see a longer term target inflation rate in the 3-3.5% range. #ppi #infaltion #consumer #macro #insights #producer #prices

Two inflation reports released last week, the Consumer Price Index (CPI) and the Producer Price Index (PPI), showed continued inflation progress. Consumer prices were flat in October from the previous month, while the 12-month increase was 3.2%. Both were below market forecasts. Core CPI (excluding food and energy) also moderated, rising just 0.2% in October and 4.0% from a year ago–below forecast. The climb in the annual core CPI was the lowest in two years.5 Producer prices confirmed the disinflationary picture, as wholesale prices declined 0.5% in October (versus a +0.1% forecast). It was the biggest decline in 3 ½ years. Over the last 12 months, wholesale prices rose just 1.3%.

JUNE -24 WPI INFLATION AT 16-MONTH HIGH OF 3.36% The wholesale price index (WPI) inflation for June 2024 touched a 16-month high of 3.36% after scaling 2.61% in the previous month of May 2024. Between January 2024 and June 2024, the overall WPI headline inflation moved from 0.33% to 3.36%; after touching a low of 0.20% in February 2024. While the CPI is 5.08 %

Week 20 - 5 Things to Know in Investing This Week Point 3) The PPI Comes in Hot: The PPI is the producer price index, and is a measure of wholesale prices. In general, higher producer prices make their way into higher consumer prices. The April PPI was up 0.5% from last month which was much higher than the 0.3% expected. It also reversed the direction of last month’s decline. The yearly PPI was up 2.2%, also an increase from recent levels (chart below). The Core PPI, which excludes food and energy, was up 0.5% vs last month which was well above the 0.2% expected. Core was up 2.4% vs last year, also an increase from last month. Not only has inflation not subsided, it’s increasing.

#Inflation Update The July PPI report for wholesale inflation showed a rise in monthly PPI and Core PPI prices, with accelerations in year-on-year Goods PPI prices and Core PPI prices. Intermediate goods price inflation increased across all major processed and unprocessed goods categories. But this report also showed relatively low year-on-year producer inflation rates and a slowing in year-on-year Total PPI. Oil prices are currently elevated due to the geopolitical risks of an anticipated Iranian attack on Israel. The longer oil prices remain elevated, the tougher it will be to get inflation rates to fall. The Fed is watching inflation closely, and cutting interest rates would be more difficult for the Fed if inflation rates don't continue easing. We expect a September rate cut and forthcoming Fedspeak at Jackson Hole will be critical to assuage market concerns about stagflation or at least slowflation. If tomorrow's CPI report looks anything like today's PPI report with monthly increases in inflationary pressures and mixed year-on-year rates, analysts, traders, and economists could invoke "slowflation" or even "stagflation" risks. What do you think? https://lnkd.in/enR2tJsZ

Week 20 - 5 Things to Know in Investing This Week Point 3) The PPI Comes in Hot: The PPI is the producer price index, and is a measure of wholesale prices. In general, higher producer prices make their way into higher consumer prices. The April PPI was up 0.5% from last month which was much higher than the 0.3% expected. It also reversed the direction of last month’s decline. The yearly PPI was up 2.2%, also an increase from recent levels (chart below). The Core PPI, which excludes food and energy, was up 0.5% vs last month which was well above the 0.2% expected. Core was up 2.4% vs last year, also an increase from last month. Not only has inflation not subsided, it’s increasing.

#CNBC: Wholesale inflation measure rose 0.1% in July, less than expected The producer price index, a measure of wholesale inflation, increased 0.1% on the month, less than 0.2% forecast. PPI excluding food and energy was flat. On a year-over-year basis, headline PPI rose 2.2%, a sharp drop from the 2.7% reading in June. Core PPI rose 2.4%, a sharp drop from the 3% reading in June. The latest inflation data comes with markets fully pricing in an interest rate cut at the September meeting of the Fed’s open market committee. We will likely wait for the CPI, PCE and the job market report data release to give the final confirmation. The main question now is whether the central bank will cut by a quarter or a half percentage point. The futures market currently rates it a toss-up.

The December PPI report told a much different story than last week’s CPI release as producer prices signaled deflation at the wholesale level for the third consecutive month. Whereas consumer prices had been warmer than expected in December, producer prices were much cooler. HilltopSecurities Senior Portfolio Manager and Managing Director Scott McIntyre, CFA discusses this in our newest commentary: https://lnkd.in/gv2ji5xm #HilltopSecurities #Economy #BondYields

WPI vs CPI – Key differences WPI calculates the average price change at a wholesale level, whereas the CPI calculates the difference in the prices at a retail level. While WPI is concerned with the goods that the trading houses trade, CPI is concerned with the goods that the consumers purchase. WPI only measures goods, while the CPI measures goods and services. It measures inflation in the first stage CPI measures inflation in the final stage. WPI is the value a retailer/distributor pays. CPI is the price a consumer pays WPI articles cover fuel, energy, and manufacturing products, CPI articles cover education, transportation, communications, recreation, clothing, housing, and healthcare Only a few countries use the wholesale index, whereas more than 157 countries primarily use the consumer index. #Economy

US March Producer Price Index (PPI, aka Wholesale Inflation) rose 0.2% vs expected 0.3% creating a mixed inflation picture relative to hot 🥵 CPI US markets futures recover and moving to green from initial deep red following yesterday’s selloff on hot 🔥 March CPI print First time unemployment claims also came in lower than expected suggesting a resilient labor market Next print of the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Pruce Index on April 26 may lend further clarity to the Fed on pace and trajectory of rate cuts (if any) in 2024. #markets #futures #cpi #ppi #pce #labormarket #jobs #inflation #fed #ecb #boc #ratecuts