PPI Develops a Sinking Feeling

By Brad Zigler

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

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

After this, tomorrow's release of Consumer Price Index numbers ought to be anticlimatic, right?