What a week. After a string of economic reports in recent days suggesting that the death of growth has been greatly exaggerated (at least for the time being), today’s release on the producer price index surprises with a higher-than-expected rise in wholesale prices for January. The consensus forecast called for a 0.2% rise in PPI last month, with the actual number coming in a bit higher at 0.3%, according to TheStreet.com.
No big deal, right? Maybe. Monthly numbers don’t mean much. Trends over time are something else. With that in mind, consider the following chart and the conspicuously rising rolling 12-month change in PPI. You don’t need to be an economist to see that wholesale prices are on the rise, advancing at an annual pace of 5.7% last month vs. falling in 2002.
But if such a vision sends you into paroxysms of despair, we have the perfect antidote for what ails you: wholesale prices less food and energy. This is the pick-me-up you’ve been waiting for to chase the inflation blues away. Core PPI, after making a run for higher elevations in 2004 and early 2005, has taken a turn for lower realms lately. As the following chart illustrates, core PPI rose by 1.5% in January over the year-earlier pace. That’s down from the 2.8% rate of increase posted last May, and a heck of a lot lower than the 5.7% in top-line PPI.
