The February Produce Price Index (PPI) report released on Thursday once again debunked President Biden's claim that inflation is moving "down." Instead, the latest print of the gauge measuring costs upstream from consumers showed prices surging faster than expected according to data from the Bureau of Labor Statistics (BLS).
Expected by Wall Street to rise 0.3 percent month-over-month, headline PPI inflation doubled projections in February with a 0.6 percent advance. On an annual basis, PPI inflation is up 1.6 percent, "the largest rise since moving up 1.8 percent for the 12 months ended September 2023," BLS said Thursday morning.
PPI for final demand rises 0.6% in February; goods increase 1.2%, services advance 0.3% https://t.co/dyytPa3BcK #PPI #BLSdata
— BLS-Labor Statistics (@BLS_gov) March 14, 2024
February's 0.6 percent PPI advance is also double January's 0.3 percent increase and a significant reversal from December 2023's monthly 0.1 percent dip. Some two-thirds of the increase in February "can be traced to the index for final demand goods, which advanced 1.2 percent," BLS explained. "Prices for final demand services moved up 0.3 percent."
Core PPI inflation — which excludes food, energy, and trade services — advanced 0.4 percent in February for a 12-month increase of 2.8 percent. That latter number, notably, is well above the Federal Reserve's target inflation rate of just 2.0 percent. The whole report, notably, proves that inflation is not, as Biden and his administration insist, going down. Instead, it's increasing — faster than expected and at a greater rate than any 12-month period since September 2022-September 2023.
PPI is re-accelerating, up 0.6% m/m on headline vs expectations of 0.3%.
— Markets & Mayhem (@Mayhem4Markets) March 14, 2024
This means there is additional inflationary potential in the pipeline should companies decide to pass on higher costs to consumers aka "cost push inflation"
Usually a 2-3 month lag time for PPI -> CPI. pic.twitter.com/ZubiWPTJDB
The latest PPI print means more uncertainty about what the Fed and its chairman Jerome Powell will do in response to still-increasing inflation across the board of metrics used to measure costs to American consumers and producers. With surging PPI inflation, there's also room to worry that consumer inflation will increase in the months ahead as summer begins as a result of producers passing along chronically high costs to end-use consumers.