PPI in at 9.75% YOY

Great Scott!

The update on the Producer Price Index (PPI) by Commodity (Final Demand) was released this morning with the December 2021 numbers, coming in at 131.48.

As you can see from the chart below, this PPI data point reflects a year-over-year rate of 9.75% in price increase (essentially minimal change from last month’s number, but on the cusp of double digits). Notice how the BLS had to change the scale of the chart in 2021 due to the rocket to the moon.

Compare this to the latest Consumer Price Index (CPI) data. Yesterday, the CPI update came in at 7.12% year-over-year, a new high since 1982. Great Scott! Have we gone back to the future into the stagflation of the 1970s?

Knowing how the government operates in twisted fashion, they will likely claim some sort of “victory” because the monthly change in PPI dropped down to 0.17% (see chart below).

The talking point from the White House will, no doubt, be something like, “We have successfully slowed the rate of inflation! We are so great. Now continue to worship us and pay tribute by sacrificing your first born this tax season!” But in reality, the monetary and fiscal policies have not changed, so can anyone really expect an improvement? No, of course not.