Producer Price Index: Headline Inflation Is Up, Core Unchanged
Doug Short | Sep 13, 2013 03:26PM ET
Today's release of the August Producer Price Index (PPI) for finished goods rose 0.3% month-over-month, seasonally adjusted, in Headline inflation More...
Now let's visualize the numbers with an overlay of the Headline and Core (ex food and energy) PPI for finished goods since 2000, seasonally adjusted. As we can see, the YoY trend in Core PPI (the blue line) declined significantly during 2009 and stabilized in 2010, increase in 2011 and then began falling in 2012. Now, as we approach mid-2013, the YoY rate is about the same as in mid-2010. The more volatile Headline number has remained in a relatively narrow range over the past 17 months.
As the next chart shows, the Core Producer Price Index is more volatile than the Core Consumer Price Index. For example, during the last recession producers were unable to pass cost increases to the consumer. Likewise in 2010 the Core PPI generally rose while Core CPI generally fell. Since 2012, Core PPI has steadily trended downward, but since January of this year, Core PPI had dipped below Core CPI. Last month they were essentially at the same YoY level, but the latest PPI slipped lower in July.
Next Tuesday will bring us the more widely followed Consumer Price Index (CPI) inflation indicator.
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