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August Producer Price Rise Disappoints, Despite Gasoline, Consumer Loan Cost Surge

Despite significant acceleration year-over-year – thanks to a 9.5% surge in gasoline costs – producer price appreciation in August disappointed expectations. PPI Final Demand YoY accelerated from 1.9% to 2.4% (but fell below the 2.5% expectation), rising only 0.2% MoM.

The corest of the core PPI remained below The Fed's mandated inflation target for the second straight month…

 

But headline PPI jumped to 2.4% YoY… perhaps putting more pressure on The Fed…

 

Prices for final demand goods advanced 0.5 percent in August, the largest rise since moving up 0.5 percent in April. Most of the August increase can be traced to the index for final demand energy, which climbed 3.3 percent. Prices for final demand goods less foods and energy moved up 0.2 percent.

In contrast, the index for final demand foods fell 1.3 percent. 

Three-quarters of the August increase in the final demand goods index can be traced to prices for gasoline, which jumped 9.5 percent .

Over half of the August increase in the index for final demand services can be attributed to prices for consumer loans (partial), which advanced 1.7 percent 

This is the highest level of consumer loan price index since Nov 2015…

In other words, as inflation rises, the cost of taking out a loan to maintain your standard of living is also increasing…

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