PPI: Told ‘Ya So
The index for final demand less foods, energy, and trade services rose 0.6 percent in January 2023, the largest advance since moving up 0.9 percent in March 2022. For the 12 months ended in January 2023, prices for final demand less foods, energy, and trade services increased 4.5 percent.
The days of "hide the sausage" fiscal policy irrevocably ended with the Ukraine/Russia conflict as a direct result of our, and Europe's, sanctioning actions. It's gone and not coming back.
The Omnibus, a monster deficit spending bill that was passed in the last days of the previous Congress, is now starting to show up in the PPI. Its not in the CPI yet and won't be for another year in full, so anyone who thinks inflation is "headed downward" has rocks in their head. This is the classic double-spike move that occurs when you think you can blow more credit into the system instead of learning from the first inflationary spike that what you did was stupid and must not be repeated.
Even less food and energy the rise was 0.6% on the month in goods which is a 7.4% annualized rate. Services were up 0.4% even into softening inflation in trade, transportation and warehousing, all goods-movement related, which is quite bad because taking those out that puts services inflation at the same 7.4% annualized rate.
What's even worse is that unprocessed goods on an intermediate basis were up 0.9% on the month when you remove food and energy, which is an 11.3% annual rate. That's three to six months out from showing up in the CPI, but show up it will and there is no getting around it.
The Stage 1 numbers show the same sort of trend; the previous decline has reversed and this is time-related directly to the Omnibus, rising 0.8% on the last month.
No, inflation is not coming back down; the evidence is that are headed for the second spike caused directlyby Congress and the Biden Administration along with you, dear Americans, who continue to believe you can have something for nothing.
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