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PPI Develops A Sinking Feeling
Written by Brad Zigler   
Wednesday, 15 October 2008 13:08
Wholesale prices throughout the supply chain have fallen off the inflationary wagon, according to the U.S. Bureau of Labor Statistics. The Producer Price Index for finished goods slipped 0.4% last month, following a 0.9% decline in August. Prices received by producers of intermediate goods fell 1.2% after decreasing 1% a month earlier. Crude goods prices also declined 7.9% in September, on the heels of an 11.9% dip in August.

 

Producer Price Index

Chart: Producer Price Index

 

Readers of this column shouldn't be surprised by these numbers. It's not that we didn't see this coming. After all, we've got a real-time yardstick that allows us to measure inflation and deflation (see "Computing Inflation In Real Time").

The deflation in wholesale prices was presaged by a reversal in monetary inflation that began earlier this year.

 

Monetary Inflation Vs. Gold Price

Chart: Monetary Inflation Vs. Gold Price

 

After this, tomorrow's release of Consumer Price Index numbers - and our own Breakfast Index readings - ought to be anticlimatic, right?

 

 

More on this topic (What's this?)
The Household Driven Deflation? (Zero Hedge, 6/6/09)
Melissa Francis Takes On Deutsche Bank Chief Economist, Epic Fail Ensues (Zero Hedge, 6/4/09)
Inflation: The Silent Earnings Killer (Investment U, 8/22/08)
9 Out of 10 Economists Recommend Inflation (Jutia Group, 5/20/09)
Read more on Inflation, Producer Price Index (PPI), Deflation at Wikinvest
 
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