From Wolf Street May 13:
This is a massive amount of inflation that companies are passing on to each other through much of the economy.
The Producer Price Index final demand (PPI), which tracks inflation in prices that companies pay each other, spiked by 1.38% in April from March (+17.8% annualized), seasonally adjusted, the worst since the historic one-month spike in March 2022, driven by services and energy. It had already spiked by 8.7% annualized in March – and by 7.0% and 6.6% annualized in February and January before the energy price spike hit (blue in the chart).
Year-over-year, it spiked by 6.0%, the worst since December 2022, according to data from the Bureau of Labor Statistics today (red in the chart).
The shocker is the spike in services, and services dominate the PPI. The services PPI weighs 68% of the overall PPI, and it completely blew out – that was in addition to the spike in energy prices, and it also shows how some of the energy price increases have moved into other parts of the economy.
The services PPI spiked by 1.18% (+15.1% annualized) in April from March, seasonally adjusted.
Year-over-year, the services PPI jumped by 5.5%, the worst since November 2022. The low point, the point of the coolest recent services PPI inflation, was in December 2023 at 1.8%. The inflation rate has multiplied by more than three since then.
Within the services PPI:
- Trade services (weigh 19% in overall PPI) spiked a huge +2.7% month-to-month not annualized in April from March.
- Transportation & warehousing services (weigh 4.9% in overall PPI) exploded by 5.0% not annualized in April from March.
- But “other services” (weighs 38% in overall PPI) ticked up only +0.1%, after no change in the prior month.
This is really bad.
Core PPI Final Demand, which excludes energy and food components, spiked by 1.03% (+13.1% annualized) in April from March, seasonally adjusted.
This shows the massive impact of the blow-out of the services inflation in PPI, since the price spike of energy components is excluded from the core PPI.
Year-over-year, core PPI jumped by 5.2%, the worst since December 2022....
....MUCH MORE
Earlier today: