If Bernanke is looking for inflation under every rock and cranny, he may have just found it in today's PPI, if only in its energy components. While the headline June number was expected to jump sequentially by 0.5%, the same as May, the final print [5]came at 0.8%, or 2.5% on a Y/Y basis - the highest since March 2012 - driven entirely by Energy good prices, which soared by 2.9% sequentially, the most since February's 3.2%. Foods PPI jumped by a more manageable 0.2%, although no matter how, it is inevitable that producers will now pass both of these to consumers whose purchasing power, especially at the gas pump, is about to be severely tested especially with fuel prices now once again rising [6]at the fastest pace in months.
[7]
The Y/Y change: well above 2%...
[8]
Where did this surge come from? Crude goods.
The Producer Price Index for crude materials for further processing was unchanged in June. For the 3 months ended in June, prices for crude goods moved up 1.7 percent after falling 1.8 percent for the 3 months ended in March. On a monthly basis in June, a 0.3-percent increase in the crude energy materials index and a 0.1-percent advance in prices for crude nonfood materials less energy offset a 0.3-percent decrease in the index for crude foodstuffs and feedstuffs. (See table B.)
And the chart: whoosh.
[9]
Finally, those who actually eat, will be curious to see the progression of food production by stage:
- Crude foods: Prices for crude foodstuffs and feedstuffs decreased 0.3
percent in June. In the second quarter, the index for crude foods moved
down 0.9 percent after falling 0.6 percent for the 3 months ended in
March. The monthly decline in June was led by a 3.8-percent drop in
prices for slaughter steers and heifers. Lower prices for raw milk and
unprocessed finfish also were factors in the decrease in the index for crude foodstuffs and feedstuffs. - Intermediate foods: Prices for intermediate foods and feeds climbed 0.7 percent in June following a 1.1-percent rise in the prior month. A major factor in the June increase was a 1.5-percent advance in the index for processed poultry. Higher prices for meats also contributed significantly to the rise in the index for intermediate foods and feeds.
- Finished foods: Prices for finished consumer foods advanced 0.2 percent in June following a 0.6-percent increase in May. The June rise was led by the index for meats, which moved up 4.2 percent