PPI Ex Food And Energy Jumps 0.5% On Expectations Of 0.2%, Fresh And Dry Vegetable Prices Jump By 13.7%

Tyler Durden's picture

The PPI including food and energy came at 0.8%, in line with expectations, and a decline from the previous 1.1%. Ex food and energy, Producer Prices jumped from 0.2% to 0.5%, and over 100% higher than expectations of 0.2%. Somehow, food PPI increased by just 0.3%, the lowest since August, and once again making one wonder which Department of Truth is more unbelievable: ours or the Chinese. From the release: The Producer Price Index for finished goods rose 0.8 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance followed increases of 0.9 percent in December and 0.7 percent in November and marks the seventh straight rise in finished goods prices. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 1.1 percent, and the crude goods index rose 3.3 percent. On an unadjusted basis, prices for finished goods advanced 3.6 percent for the 12 months ended January 2011.... The index for finished consumer foods moved up 0.3 percent in January, the fifth consecutive monthly increase. A 13.7-percent advance in prices for fresh and dry vegetables was the main factor in the January rise in the finished consumer foods index...In January, the index for intermediate foods and feeds moved up 0.4 percent for the second consecutive month. A 2.7-percent rise in beef and veal prices accounted for about forty percent of the January increase in the intermediate foods index.

Elsewhere, January housing starts increased by 596K from a downward revised 520K, on expectations of 539K, while permits dropped from a downward revised 627K to 562K, on expectations of 559K. All continue crawling along the bottom, as nobody buys anything on credit (see MBA refi index data earlier). Furthermore, the surge was due mostly to a jump in multi-family units (171k compared to 95k in December). Single unit starts actually dropped from 417K to 413K. Oddly enough, snow was not blamed: not seasonally adjusted starts were 458K, while NSA permits were 431K. Looks like the seasonal adjustment here was more than enough to account for the collapse in true numbers...

PPI Release.

Housing Starts Release.

And here is Goldman's take:

BOTTOM LINE: Core producer price indexes surge at both finished and intermediate goods stages of processing, with no single component responsible for these significant upside surprises. Housing starts also rise more than expected, but increase is entirely in multifamily sector and appears due to efforts to start construction before changes in building codes.

PPI core index +4 (2, +2)
Housing starts 0 (1, 0), including a -1 judgmental adjustment for composition.

Producer price index +0.8% in Jan (mom, +3.6% yoy) vs. GS +0.9%, median forecast +0.8%.
Ex food and energy +0.5% in Jan (mom, +1.6% yoy) vs. GS and median forecast +0.2%.
Housing starts +14.6% in Jan (mom, -2.6% yoy) vs. GS +7.5%, median forecast +1.9%.
Permits -10.4% in Jan (mom, -10.7% yoy) vs. median forecast -10.9%.

1. The core indexes of the producer price index surged in January-up 0.5% for finished goods and 1.0% for intermediate goods. In the case of the finished goods component, the increases were sprinkled widely enough that no single factor can be blamed. Scanning the report, pharmaceuticas, tires and tubes, sanitary paper products, toys and games, sporting goods, commercial furniture, and truck trailers all posted monthly increases of 1% or more. In the intermediate sector, prices of industrial chemicals accounted for roughly ¼ of the 1.0% increase, according to the Bureau of Labor Statistics. Data for prior months were revised to update seasonal factors.

2. Although this was a huge and unexpectedly diverse increase in the core finished goods index, we would be reluctant to make much of it in terms of implications for core consumer inflation, as correlations between the two have been much weaker in the past 25 years than before. Surprisingly, food and energy were fairly tame, rising 0.3% and 1.8%, respectively.

3. Housing starts rose 14.6% in January to 596k, as a 77.7% surge in multi-family starts outweighed a 1% drop in single-family starts. Moreover, there were small downward revisions to December. Permits for new construction, however, fell 10.4%. In particular, permits for multi-family houses-which tend to have most predictive power for future housing activity-slumped by 23.8%. As noted last month, permits rose sharply at year-end 2010 to beat changes in building codes that went into effect in several states; this had a pronounced effect on the multifamily figures that will be fleeting.

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jus_lite_reading's picture

The people on main street say food prices are increasing 5-7% MoM since December. No wonder why Wall Street insiders sold $1.3 BILLION in stock last week! To pay for their bigger food bill!

cossack55's picture

Thats it. I'm buying a cow and 4 chickens.

Jason T's picture

New Dark Age approaching.  First our infrastructure, rails, bridges, ect. were allowed to depreciate down to nothing.. soon our  real estate will be the same.  old and falling apart.. unless of course you have $ to fix it up and are willing to do the work.

hamurobby's picture

 I noticed the food bill was up a bit, although I am sure its just the maids or butlers are stealing, in fact I am sure of it. I will just cut their wages, that will teach them.

vxpatel's picture

SPAM bonuses for the kitchen staff.

SheepDog-One's picture

Spam isnt a po'mans item any longer at about $5 a tin!

EscapeKey's picture

Looks like vegetables are ripe for hedonic adjustments, much like clothes, shoes, and educational textbooks (!)



Corduroy's picture

Replace fresh produce with moldy low grade produce on the PPI as the extra fungus may provide health benefits so people would naturally want to buy the moldy food

goldfish1's picture

Just priming the sheep

for chinese chicken and vegetables.

Id fight Gandhi's picture

I'm sure they're spinning the numbers today to make the world rally goon.

Oddly I read Egypt not opening their markets and trying to cancel trades from their crash last month.

Love the free markets

thedrickster's picture

"A 13.7-percent advance in prices for fresh and dry vegetables was the main factor in the January rise in the finished consumer foods index"

Peso gains are showing up in the grocery store? But I am sure the veggie eaters of Amerika have seen their exports surge to a sufficient level to offset the rising price of incredibly shrinking grocery carts and the margin destruction cleverly embedded in the PPI number.

youngman's picture

And gold and silver are getting hit this AM..right on schedule...actually 30 minutes ahead of schedule....

docj's picture

Heh, yep.  Because run-away inflation and collapsing margins are definitely bullish for stocks (BTFD!!!!).

Swell.  Silver was drifting out of my "buy" point, anyway.

PS - some of the answers to the math question can, indeed, be more than 3-characters long (-34 times seven =...)

firstdivision's picture

This is confirming that inflation is starting to leak out.  It will be a massive sudden spike, just like in the 70's.  What I still find odd is how many housing starts continue unabated.  Mortgage apps have still done nothing but fall, so who's buying?

bankrupt JPM buy silver's picture

No one.  Just came back from FL, word has it, a major home builder has to bulldoz 90% of the houses he built last year, just to sell the houses he's building now...good times coming!



vxpatel's picture

Fat americans don't need to be eating no veal anyhow. Let them eat cake.

Henry Chinaski's picture

I do the grocery shopping.  Food prices are going up substantially every week.  Time to step up the hoarding and fill the chest freezer.  Guaranteed ROI.

Critical Path's picture

Same here.  I've noticed the increases myself, almost everything.  Was shopping the other day and noticed coke was selling a case of 20 cans for what you used to be able to get 24 cans for.  Spring is coming around, it might be time to think about planting some stuff.

ElvisDog's picture

I look forward to Bernanke/Geithner's next "inflation is expected to remain subdued" statement.

Shameful's picture

Well lucky for us most Americans don't eat any sort of vegetables!

SheepDog-One's picture

Yep, vegetables are now mainly used for porn videos.

Rodent Freikorps's picture

Chicks eat that bunny food all the time.

Would you want to piss off every female in America?

They'll surely go to war if bread prices rise too much.

umop episdn's picture

which Department of Truth is more unbelievable...

We need an unbelievability index!!!1!1!

No inflation = two unicorns pooping skittles.

slovester's picture

Bloomberg spins the headline again:

Wholesale Prices in U.S. Increase on Higher Fuel Prices, Match Forecasts

Yeah buddy, forecast 0.2 and it comes in at 0.5 -- that is definitely a match...  I am amazed that "better than expected" didn't get into that headline also.

SheepDog-One's picture

'Green shoots' were mentioned, but theyre 20% more expensive.

Henry Chinaski's picture

Like the guy on the radio said today.  "Inflation is increasing; could this be a sign that the economy is improving?"  Yeah.  That's the ticket.

LawsofPhysics's picture

Buying the cow(s) is the easy bit.  It is the maintenance that will cost you.  Trust me, we have around 70 head.

topcallingtroll's picture

I am much more interested in what the numbers look in the third quarter. We should know by then if this is peak hysteria or just the beginning. Meanwhile the dollar is off its lows and sneaking up without anyone noticing.

william the bastard's picture

The incredible shrinking meat dress.

NOPOMO's picture

Oh, those tax cut extensions we gave you in 2010...we are taking it back in spades with surging food/energy prices.

No problem for the wealthy because it is a small portion of their disposable income. 

The Politicians are working for the wealthy.

SheepDog-One's picture

Yea, and its not that anyone is MAKING any more, just got to tax that ass americans sorry, hey the central banksters around the world HAD to get paid back or Bernanke and Geithner woulda been in real hot water! Suck it, USA!

whatz that smell's picture

HFT9000 doesn't eat vegetables, dry, fresh, or otherwise so their prices they do not compute.

otherwise, BTFD... it's delicious!

pazmaker's picture

I'm still buying  white long grain rice at $.50 per pound locally and not at walmart.  Walmart has it at $.59 per pound.  I have seen a huge increase in pricing on fresh veggies.


Curious what others are paying for Rice.  I live in SE US

sharkbait's picture

As one bernank schill, I mean highly educated and wise professional posted here once, "Don't confuse cost of living increases with real inflation".  that's all this is, just a cost of living increase, it isn't inflation.  Fire up the presses!  Get more money into the system.  People need it to meet those cost of living increases, there is no inflation yet!  And when it is threat, we can kill it in an inflation adjusted 15 minutes.

Earth to Ben, Earth to Ben?  Are you there?

TooBearish's picture

Inflation expectations remain low....FOMC 1/19/11

Stuck on Zero's picture

Our food costs are not up at all because of my "hedonic shopping".  But the kids are complaining about eating grass clippings, pine needles, and rat soup.

Rodent Freikorps's picture

Try marinating the rat overnight. Takes away the gamy taste.

Agent P's picture

Great, now I need to yell at my kids to stop eating their vegetables.

johngaltfla's picture

Thankfully there is no real inflation according to the Fed and the government. I might worry otherwise.

vxpatel's picture

Luckily for us we eat less fresh produce and meat per capita than almost any other country...


topcallingtroll's picture

Meanwhile the fed quarterly report on household debt is out.  Households continue to deleverage.  Inflation may not be the slam dunk trade people think it is, especially if you were late to the party.

You will have to google it.  I don't know how to cut and paste links.  My secretary does everything for me except troll.

hardcleareye's picture

"I don't know how to cut and paste links."

Troll do you have blond hair and store bought tits?  You know, a bouncing botox barbie......

Pee Wee's picture

...and bonuses are up robbing the poor to feed the rich.

Dear Ben, FUCK YOU!

Now, where's that carpetbagger Krastings to tell us how wonderful socialized losses are with a clean conscience and empty stomach...