October 2017 Producer Price Index

Inflationary pressures continued their recent advance according to the October 2017 Producer Price Index data from the Bureau of Labor Statistics.  For a second consecutive month, the headline figure increased 0.4 percent.  On a year-over-year basis, the trend accelerated to 2.8 percent from 2.6 percent in September.

Final demand services led the headline tally’s gain, but prices for final demand goods increased as well.  Rising 0.5 percent, services increased faster than in any month since April of this year.  Three-quarters of services’ uptick is attributed to trade (measuring margins received by wholesalers and retailers) which increased 1.1 percent.  Final demand goods rose 0.3 percent in the period.

Data for earlier stages of output were mixed but exhibited an upward bias.  Processed goods for intermediate demand increased 1.0 percent, led by an uptick of 1.8 percent for energy goods.  Unprocessed goods for intermediate demand were unchanged, but it is worth noting that the energy portion was up 2.1 percent.  Finally, services for intermediate demand increased 0.3 percent in October and 2.9 percent in the past year.  Like the later stage of services, trade led this tally higher, but its increase was just 0.5 percent in the period.

From the looks of this indicator, inflation is starting to trend higher.  The year-over-year tally for final demand less food and energy (aka core PPI) hit 2.3 percent in October.  This is the highest level for the 12-month trend in over a year.  Atlas follows other inflation gauges and will continue to monitor them as well.  If it begins to look like accelerating inflation is here to stay, we’ll let you know.