US Food and energy prices increase, annualized at over 40% as we await the first real inflationary CPI report tomorrow

PPI  or wholesale inflation is nowhere near contained as the Fed likes to repeat.  CPI is between 1% and 2%, but PPI inflation is red hot as both energy and food, jacked up the headline number. PPI came in at 1.6% increase for the month of February, or annualized at an unbelievable Venezuela type number of 19.2%.  YOY the increase is only 5.8% but this could be a dangerous signal.  The February increase vastly topped analysts' estimate by  0.7%. Both food and energy components were exceptionally strong.

By components, food prices surged 3.9% and energy 3.3% in one month. Annualized that is almost 47% for food and 40% for fuel.  While I don't actually suggest that these numbers will hold and we will see 47% inflation for food, it definitely is much higher than Bernanke's beard has been indicating.

The amazingly high number will likely indicate danger on the horizon for tomorrow's CPI numbers.  Remember, they used to call PPI wholesale inflation because it usually takes some time, but eventually these numbers seep into the CPI.  Via BLS:
The Producer Price Index for finished goods increased 1.6 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 0.8 percent in January and 0.9 percent in December, and marks the largest increase in finished goods prices since a 1.9-percent advance in June 2009. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 2.0 percent, and the crude goods index climbed 3.4 percent. On an unadjusted basis, prices for finished goods advanced 5.6 percent for the 12 months ended February 2011, the largest 12-month increase since a 5.9-percent rise in March 2010.

Month
Finished goods
Intermediate
goods
Crude
goods
Total
Foods
Energy
w/o foods
& energy
YOY
2010
Feb.
-0.4
0.5
-2.3
0.0
4.2
0.1
-1.7
Mar.
0.7
2.5
0.7
0.2
5.9
0.6
-1.0
Apr.
-0.1
-0.2
-0.2
0.1
5.4
0.8
-1.9
May
-0.2
-0.4
-1.0
0.2
5.1
0.2
-3.3
June
-0.3
-2.4
0.2
0.1
2.7
-0.7
-3.0
July
0.1
0.7
-1.0
0.2
4.1
-0.4
1.5
Aug.
0.6
-0.1
2.5
0.1
3.3
0.6
3.3
Sept.
0.3
0.9
0.0
0.2
3.9
0.4
0.6
Oct.
0.6
0.5
3.0
-0.3
4.3
1.0
4.8
Nov.
0.7
0.8
2.4
0.0
(r)3.5
1.2
1.2
Dec.
0.9
0.8
2.8
0.2
4.0
0.9
6.5
2011
Jan.
0.8
0.3
1.8
0.5
3.6
1.1
3.3
Feb.
1.6
3.9
3.3
0.2
5.6
2.0
3.4


Comments

Popular posts from this blog

October retail sales come in strong, especially auto sales

Tea Party Buffalo Pictures

How to spot a fake Tea Partier