US Producer Prices Soar At Record Pace In August, Up 9 Months In A Row

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by Tyler Durden
Friday, Sep 10, 2021 - 08:35 AM

Transitory or not?

Another month, another series of inflation indicators begins with Producer Prices and it won't help Powell's case that this is all 'transitory'. Headline PPI rose 0.7% MoM (above the 0.6% expected) which sent the headline print up a stunning 8.3% YoY...

Source: Bloomberg

And it's not all energy costs as core PPI also rose faster than expected (up 6.7% YoY) and up for the 9th straight month...

Source: Bloomberg

Perhaps more worrisome is the fact that the PPI pipeline shows this is far from over as Intermediate goods prices are still roaring and have yet to filter through top the end-product...

Source: Bloomberg

What does this mean for corporate margins? Nothing good...

Source: Bloomberg

Either firms hike prices (crushing the low- and middle-classes) or they eat the margin compression (crushing the upper-classes holding the stock).

As Bloomberg noted earlier, today's PPI print might provide an insight into next week’s CPI print, an event risk that looms large given both recent anecdotal reports (e.g. the Beige Book) and the market’s recent insouciance towards inflation concerns, which doesn’t seem like it can last forever.