Aw Crap… Here It Comes, Prices (PPI)


This ain’t good:

The Producer Price Index for finished goods rose 0.8 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance followed increases of 0.9 percent in December and 0.7 percent in November and marks the seventh straight rise in finished goods
prices. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 1.1 percent, and the crude goods index rose 3.3 percent. On an unadjusted basis, prices for finished goods advanced 3.6 percent for the 12 months ended January 2011. (See table A.)

Yuck.  This isn’t just bad, it’s horrifying.  Let’s look at the table inside because it’s there that you have to be paying attention to cost-push problems:

There’s no possible good way to look at this.

At the finished goods level we have a three month run-rate of about 0.8% monthly.  Annualized this is a 10% increase.  That’s freaking monstrous.

Worse however is in the intermediate goods; there we find a roughly 20% annualized inflation rate.

And in crude goods?  Hold on to your hat: Annualized on an average basis over the last four months it’s roughly sixty percent. 

For the math wonks: ((1.047 + 1.013 + 1.065 + 1.033) / 4) ^ 12

Margin collapse?  You better believe it. 

Either that, massive destruction of the consumer’s standard of living or both.

I’ve been hollering about this since August of last year.  Folks, the data is not getting better. 

It’s getting much worse.

The Market-Ticker