Producer Prices Surge To Record High As Services Costs Soar

Following the 39-year-high CPI print, analysts expected producer prices to continue accelerating to a 9.8% YoY surge in December, but while PPI rose for the 20th straight month, it was up slightly less than expected at 9.7% YoY – still a record high.

Source: Bloomberg

PPI Ex Food and Energy rose 8.3% YoY – well above the +8.0% expected and record hig (above November’s 7.7% print)

The CPI-PPI spread – a proxy for margin – continues to signal profit pressure for corporates…

Source: Bloomberg

And while Final Demand prices have a long way to catch up, it appears the acceleration in Intermediate Demand goods prices may have peaked…

Source: Bloomberg

Goods inflation continues to dominate Services but as the economy reopens, Services prices are accelerating…

Source: Bloomberg

A major factor in the December decrease in prices for final demand goods was the index for gasoline, which moved down 6.1 percent. That will not be the case in January with $82 WTI.

Over a quarter of the December increase in the index for final demand services can be attributed to margins for fuels and lubricants retailing, which rose 13.0 percent. The indexes for airline passenger services, food retailing, machinery and vehicle wholesaling, machinery and equipment parts and supplies wholesaling, and traveler accommodation services also moved higher. In contrast, margins for automobile and automobile parts retailing decreased 2.7 percent. The indexes for deposit services (partial) and for health, beauty, and optical goods retailing also declined.