Producer Prices Led Higher by Food Costs

By Brad Zigler

Real-time Monetary Inflation (per annum): 8.3%

Thursday's Producer Price Index release has got people talking about reflation again. Wholesale finished goods rose 0.3% in April according to the U.S. Bureau of Labor Statistics, more than the 0.1% increase expected by economists.

The annual inflation rate, however, paints a very different picture. Year-over-year, the Wholesale Price Index was down 3.7% in April, a slightly deeper dip than the 3.5% decline posted for March.

One component that pushed the monthly rate higher was food. Finished food items rose 1.5% in April, the biggest jump in more than a year.

Two production layers below, farm prices moved more dramatically, rising 5.2% after March's 2.2% decline.

Producer Price Indexes For Food

April's surge in food prices could be taken as the leading edge of inflation, at least if you look at our real-time inflation indicator. Inflation's been rising off its April base at 6.9%. When March's PPI figures were released, U.S. monetary inflation was running at a 7.8% annual rate. Today's rate is 8.3%

U.S. Monetary Inflation Vs. Gold

Comments

[johnbee:]

DBA and MOO are the best sure shot inflation and currency hedges on the horizon, and they will not drop by half like other commodities if we get more bad news.

May 15 11:13 AM