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Producer Prices Jump Most Since June, Over Half Of Core Increase Due To Tobacco Prices
Following October and November's disturbing declines in Producer Prices, which many misread as an indication that the Fed will delay tapering for a few months, today's PPI reversed the recent drop, and posted a 0.4% jump for the headline number in line with expectations, following two months of declines and the highest print since June's 0.6% sequential increase. And while the Foods PPI dropped by 0.6% in December, Energy prices jumped by 1.6% once again the highest monthly increase since June. But it was the core increase of 0.3%, the highest jump since July 2012 that caught everyone's attention. So is inflation finally seeping back in the production channel? Not really: as the BLS reported, "Nearly half of the December increase is attributable to prices for tobacco products, which climbed 3.6 percent." So bad inflationary news for smokers. For everyone else (who eats and drives hedonically) the status quo still remains.
Still at a 1.2% increase in headline PPI, compared to expectations of 1.1%, and November's 0.7%, this was the first beat in annual producer price inflation expectations since June, and means that this data point will not deter the Fed from tapering more as it has warned it will likely continue to do.
Broken down by components:
The breakdown in finished goods PPI:
Leading the December rise in the finished goods index, prices for finished energy goods increased 1.6 percent. Also contributing to the advance, the index for finished goods less foods and energy moved up 0.3 percent. By contrast, prices for finished consumer foods decreased 0.6 percent.
Finished energy: Prices for finished energy goods climbed 1.6 percent in December, the largest advance since a 2.5-percent jump in June 2013. Over half of the rise in December can be traced to a 2.2-percent increase in the gasoline index. Higher prices for diesel fuel and home heating oil also were factors in the advance in the finished energy goods index. (See table 2.)
Finished core: The index for finished goods less foods and energy moved up 0.3 percent in December, the largest advance since a 0.5-percent rise in July 2012. Nearly half of the December increase is attributable to prices for tobacco products, which climbed 3.6 percent. Higher motor vehicle prices also contributed to the advance in the finished core index.
Finished foods: The index for finished consumer foods fell 0.6 percent in December following no change in November. Leading the decrease, prices for fresh and dry vegetables dropped 13.4 percent.
The real question remains: will Japan continue to export its deflation to the world, and the US, and if so is the recent jump just a one-time fluke?
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Like bullets, make your own.
If you smoke in wa state you might as well shoot your self financially. Drinking too. High taxes.. a pack of Camel is 10 dollars at the quickie mart.
Any hardcore smoker should check out beedis. It's what I smoke and they rock....
Clean smoke in a leaf. If anyone wants to get some, be happy to introduce you to my organic beedi supplier here in India.
Great prepper item too I feel and SO CHEAP.
http://en.wikipedia.org/wiki/Beedi
ori
Beedis: Good for you
Pack a day is like a fucking car payment.....redistribute income
The economy is now saved!
lol
Total joke.
Roll your own, 2 packs a day, raw leaves, $1.20 total daily habit for over 25 years.
Now you just have to be smart enough to find raw leaves, but hell your smart ain't you?
Oh, fuck you! Look at the price at the grocery store asshole! If the tobacco companies were not forced to pay people with poor personal habits and no control, the price of tobacco for those stupid enough to use it would be fine but, our brilliant government, you know the one that bankrupt our country with debt decided this issue would get them votes so helped the greedy lawyers to get billions for the families of those who abused themselves and hence the price must go up while the attorneys spend the summer in the Hamptons! Wait till they start factoring in the price of weed which may end up being the only thing left we produce! Lol!!
I'm too "stupid" to smoke cigarettes, so I only smoke cigars.
Tobacco is such a scam. I only smoke PCP.
80-20 Hamburger $1.29 in December 2008 Now $3.65 example: Do the percetage of price increase as a percentage per year! Is it slightly under 40% per year? ?
Tobacco is a "core" product but food isn't? Housing isn't?
Fuck these guys.
"80-20 Hamburger $1.29 in December 2008 Now $3.65 example: Do the percetage of price increase as a percentage per year! Is it slightly under 40% per year?"
Dec 2008 to Dec 2013 would be 5 years, so 5th root of (3.65/1.29) = 77% inflation per year.
spungo A gallon of unleaded was $1.69 in 2008, somewhere around $3.40 gallon now. Sheep would be shocked to know the true rate of inflation today.
they've got some Indian Nation in North Dakota processing oil into fuel now. "that will be tax free." if the same starts happening with ethanol "look out below." Steve Hansen already has a great article on import prices collapsing...14 months in a row! since we already have "wacky tobacky" hard to go long the cigarette/gambling/gasoline mafia here.
The cost of a pack of smokes is mostly in the fed and state taxes on them. A 4% rise in tobacco would be hardly noticed.
The big windfall profits go to the government. They always win, huh.