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Producer Prices Jump MoM Most Since Sept 2012 Driven By Higher Energy Costs
Producer Prices Final Demand rose 0.5% MoM - the biggest monthly rise since September 2012. With the gasoline index up a stunning 17% (but but but) 80% of the broad-based advance is attributable to prices for final demand energy - which increased 5.9%. In contrast, Final Demand PPI YoY Ex Food & Energy dropped to +0.6% - the lowest on record in the short time series.
Biggest jump in PPI in almost 3 years...
Goods
Final demand goods: The index for final demand goods moved up 1.3 percent in May following a 0.7-percent decline in April. Eighty percent of the broad-based advance is attributable to prices for final demand energy, which increased 5.9 percent. The indexes for final demand goods less foods and energy and for final demand foods rose 0.2 percent and 0.8 percent, respectively.
Product detail: Sixty percent of the May advance in prices for final demand goods can be traced to the gasoline index, which jumped 17.0 percent. Prices for diesel fuel, chicken eggs, jet fuel, pharmaceutical preparations, and motor vehicles also moved higher. In contrast, the index for residential natural gas fell 1.6 percent. Prices for hay, hayseeds, and oilseeds and for primary basic organic chemicals also decreased.
Services:
Final demand services: The index for final demand services was unchanged in May after inching down 0.1 percent in April. In May, a 0.6-percent increase in margins for final demand trade services offset a 0.2-percent decline in prices for final demand services less trade, transportation, and warehousing and a 0.1-percent decrease in the index for final demand transportation and warehousing services. (Trade indexes measure changes in margins received by wholesalers and retailers.)
Product detail: Among final demand services in May, margins for food and alcohol retailing advanced 4.2 percent. The indexes for apparel, jewelry, footwear, and accessories retailing; television, video, and photographic equipment and supplies retailing; inpatient care; and residential real estate services (partial) also moved higher. Conversely, prices for services related to securities brokerage and dealing fell 7.4 percent. The indexes for machinery and equipment wholesaling; loan services (partial); health, beauty, and optical goods retailing; and wireless telecommunication services and also declined.
But core PPI dropped to its lowest on record YoY...
But the best news: alcoholic beverage prices supposedly dropped by 0.1% over the past month.
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So demand is lower but prices are higher?
Sounds like the New Normal all right.
Cut wages to increase consumption!
So demand is lower but prices are higher?
If I may....
And what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help — there were other players in the physical-commodities market — but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures — agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.
http://trueslant.com/justingardner/2009/07/03/matt-taibbi-blows-the-lid-off-oilgas-speculation-by-goldman-sachs/
Prices leading to lower demand. We are all Zimbabweans
Does anyone really care?
Mental masterbation at its best.
If it is not real why does anyone kept analyzing the data?
ZH is really trending to a diminishing return with each of these steeple articles.
more like 'monetary masturbation'
The Fed is behind the curve on inflation, period. Anyone that produces a real product (requiring real resources and energy) knows this. I think the Fed knows this too. It explains Yellen perfectly, as in the perfect patsy.
So much for cheaper oil.
The Federal Reserve wants massive inflation and they'll get it while impoverishing all the 90%ers.
To state the obvious: Higher energy "costs" are not really costs, they are "prices" chosen by bankers.
There is no real market in energy, either. It is all managed by the criminally insane... who manage through "covet means" (hat tip to JFK)
I'm back to buying Costco gasolne .... it's lower again .... than the Mex Pex (Pemex) ! Bonus anecdote: 10 lb bag o spuds ($4 Pesos por kilo x 4.5 kilos = 18 Pesos = $ 1.16 Dollars) ! Mexican Cirle K/Pemex advertized .... we sell 100% litros completos .... they're swamped .... with a good exchange rate $15.20 pesos/dollar .... they were told to take down the sign .... business surged .... sharks swimming after the scent of over board dead slaves ! Friend "Mike" .... Florida refugee .... is moving from $450 dollar/mo house .... to a $160/dollar 2 bdr. apartment next door .... one block off bitch !
Bullish