Wsj_ppi10182005091359Producer Prices in September soared "by the largest amount in more than 15 years." While the Sunshine squad blamed "hurricane-spurred surge in energy prices" the so-called core inflation pressures also appeared to gain momentum.

The 4.2% year over year difference in price increases between Finished Goods (+6.7%) and Core Finished Goods (+2.5%) was the biggest in 30 years.  Raw-materials up 10.2% in September (versus 2.3% in August).

Can you say margin squeeze and/or earnings hit?

The BLS reported that PPI for finished goods increased 6.9% over the past 12
months . . . the fastest rise in prices in 15 years. This was almost double the rate in June. 

Further, the WSJ reported "the uptick in inflation wasn’t confined to the typically volatile food and energy sectors, however: excluding those costs, inflation posted a worrisome increase of 0.3% after showing no increase at all in August."

Hey, you mean stuff besides food and energy is going up in price? Gee, except for housing, industrial metals, insurance, medical care, wood, paper, precious metals, and education, very little is rising in price. Note that rotary phone prices held firm; Other than that, all bets were off.

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click for larger chart

Ppi_yoy_october_05

Chart courtesy of Briefing.com

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UPDATE October 19, 2005 12:23 PM

Today’s NYT:

Producers Are Absorbing Higher Fuel Costs, for Now
http://www.nytimes.com/2005/10/19/business/19econ.html

"Thus far, businesses have not passed along the entire increase in their costs
to consumers. Economists have struggled to explain fully why that may be
happening and how much longer it can continue.

Technology and other cost-saving measures have allowed businesses to become
more efficient in the last decade, but those productivity gains have slowed
recently. Some companies might not be able to charge more because of
competition, even though the price of gasoline was up 12.7 percent and
commercial natural gas was up 10.4 percent."

Oh, and tired consumers unable to pay up might also help explain this . . .

 

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Sources:
Wholesale Prices Surge 1.9%; Core Price Index Rises 0.3%
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
October 18, 2005 9:16 a.m.
http://online.wsj.com/article/SB112963771212071802.html

PPI surges 1.9%, most since 1974
By Rex Nutting, MarketWatch
Last Update: 9:08 AM ET Oct. 18, 2005   
http://www.marketwatch.com/news/story.asp?guid=%
7B3FD81095-93C4-40EE-9A20-A41888A0E4F8%7D&siteid=google

Category: Inflation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “Wholesale Prices Surge 1.9%, most since 1974”

  1. R says:

    Ok, apart from the substantive reasoned analysis and commentary, that rotary phone line is why I love your blog!!

  2. scorpio says:

    i love these big numbers. highest inflation in 15 years, biggest decline consumer confidence 25 years. yet everyone goes happily on their way. my question: where were stocks trading 15-25 years ago? what multiple on the stock market in 1990? answer: a lot lower. people forget we’ve seen pe’s of 7 X, at a time when we werent faced w nearly the problems of today (not just stagflation, war, terrorism, how do u put a multiple on a market in a time of global warming?). i know i sound alarmist. but guess what, i’m alarmed.

  3. Andy says:

    Watching the latest batch of earnings… is it me or are there more reports of missing revenue targets, but still hit earnings? Anyone have stats on that? If what I’m seeing is a trend, then there’s your margin squeeze already happening.

  4. Econbrowser says:

    GM losses and other economic news

    No matter how amazing your accomplishments, it’s always nice to try to set your goals even higher. I was pretty impressed when General Motors managed to lose $1.2 billio…

  5. ItsGonnaGo says:

    Barry-

    You have been on fire with your economic commentary. Keep up the good work.

    Mal

  6. Econbrowser says:

    GM losses and other economic news

    No matter how amazing your accomplishments, it’s always nice to try to set your goals even higher. I was pretty impressed when General Motors managed to lose $1.2 billio…

  7. Econbrowser says:

    GM losses and other economic news

    No matter how amazing your accomplishments, it’s always nice to try to set your goals even higher. I was pretty impressed when General Motors managed to lose $1.2 billio…