Producer Inflation Declines Just In Time For Op Twist; Retail Sales Dive As US Consumers Withdraw

Nothing good on the US economic front as usual. After all, this is fact and data driven, not based on headline and rumors (even though the BLS does enjoy fudging the data to an extent to make a Chinaman blush). PPI came at 0.0%, in line with expectations, but PPI ex food and energy increased just 0.1%, missing expectations of 0.2%, down from July's 0.4%; it was also tied for lowest since November 2010. The 12 month change in the PPI for finished goods was up 6.5%, the lowest since March 2011. And while finished goods still retained their inflation power, it was in the intermediate space that we saw a major drop of 0.5%, the biggest in over a year and the first decline since July 2010, mostly due to energy goods: "Most of the August decline can be attributed to lower prices for intermediate energy goods, which dropped 2.3 percent. The index for intermediate materials less foods and energy also contributed to this decrease, edging down 0.1 percent. By contrast, prices for intermediate foods and feeds advanced 1.7 percent. On a 12-month basis, the index for intermediate goods moved up 10.3 percent in August." Overall, this gives more leeway for Op Twist and an IOER cut to be announced in one week by Bernanke. Which according to the Fed will be needed: Advance retail sales printed at 0.0%, below consensus 0.2% and down from a downward revised 0.3% in July. Retail ex sales and autos was the lowest since December 2010. Some comments from Bloomberg on this latest miss: Clothing sales down 0.7%, department stores down 0.3%; consumers likely cut purchasing due to rising cotton, other materials costs, says Bloomberg economist Joseph Brusuelas. "Sales disappoint as households deleveraging, real incomes decline." And scene.

Total PPI :

Core PPI (Source: Bloomberg)

PPI Table:

And Advance retail sales: