The Inflation Sh*t Is Hitting The Fan
Submitted by QTR's Fringe Finance
This morning was proof that the inflation story that markets desperately want to go away refuses to cooperate. It also adds to the case that new Fed chair Kevin Warsh could have his hands tied — and may ultimately need to redefine inflation to untie them.
This morning the Bureau of Labor Statistics reported another really ugly wholesale inflation print, adding to a growing pile of evidence that inflation pressures are proving far more persistent than policymakers, economists, and investors had hoped.
The Producer Price Index rose 1.1% in May, well above economist expectations of 0.7%. On a year-over-year basis, wholesale inflation accelerated to 6.5%, the highest reading since November 2022.
Even though core PPI, which excludes food and energy, came in slightly below expectations at 0.4% versus estimates of 0.5%, that distinction shouldn’t provide much comfort. The headline figure remains extraordinarily elevated, and businesses are still dealing with rising costs that eventually work their way through supply chains and into consumer prices. CNBC reported:
Most of the acceleration in the PPI — nearly 80% — came from a 2.8% surge in final demand goods prices, the biggest increase ever in a data series going back to December 2009. In turn, 80% of that increase came from a 10.7% jump in energy.
Economist Peter Schiff noted on X:
Producer prices spiked 1.1% in May, following a downwardly revised 1.1% rise in April. That's back-to-back months of 14% annualized increases. So far in 2026, the PPI is already up 4%. If this pace continues, it will rise 10% in 2026, matching the 2021 gain, the most since 1980.
PPI is often viewed as a leading indicator for future inflation because it measures costs before they reach consumers. When businesses face higher input costs, those costs rarely disappear into some magical accounting black hole. They generally get passed along. Companies can absorb some pain for a while, but eventually somebody pays the bill. Historically, that somebody is the consumer.
The significance of today’s report extends beyond a single monthly data point. It comes...(READ THIS FULL ARTICLE 100% FREE HERE).