PPI: Margin Collapse Accelerating


Gee Berscrewusall, what ‘ya say about this?


The Producer Price Index for Finished Goods rose 1.1 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance followed increases of 0.8 percent in November and 0.4 percent in October and marks the sixth straight rise in finished goods prices. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 1.0 percent, and the crude goods index increased 4.0 percent. On an unadjusted basis, prices for finished goods advanced 4.0 percent in 2010 after climbing 4.3 percent in 2009. (See table A.)

Oops.  Here’s the table:

Yeah – not only do we have a 12-month change of 4% (but I thought “inflation” was non-existent?) we also have a one month crude goods increase of 4% on the back of a 4.3% and 0.6% increase.  This data is noisy on a monthly basis, but the trend definitely is in the wrong direction, as is the spread – intermediate goods are showing margin compression over crude goods.

Here’s the 12-month Crude and Intermediate goods table, which shows the problem – insane price ramps:

Yeah, there’s no problem here……. 15.5% annualized with the entire last year well into double-digit territory on crude goods?

To the media:


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