Screaming Hot Producer Prices

by: Barry Ritholtz

After too many months of inflation data telling anyone with a barely functioning cerebral cortex that significant price inflation was at hand, this month seems to have jarred the denialists into a very belated recognition of reality.

click to enlarge

chart via brian jacobs

As the delightful chart porn above shows, the costs of materials for food, energy and finished goods is up significantly.

Bloomberg notes:

"Prices paid to U.S. producers rose more than twice as much as forecast in January, pushed up by higher fuel, food and drug costs, signaling inflation may keep accelerating even as growth slows.

The 1 percent increase followed a 0.3 percent drop in December, the Labor Department said in Washington. The median forecast in a Bloomberg News survey of economists was for a 0.4 percent gain. Excluding food and energy, so-called core wholesale prices climbed 0.4 percent, the most in almost a year."

Here's the money quote from BLS:

"From January 2007 to January 2008, the index for finished goods moved up 7.4 percent. Over the same period, prices for finished energy goods climbed 22.6 percent, the index for finished consumer foods rose 8.3 percent, and prices for finished goods other than foods and energy advanced 2.3 percent. For the 12 months ended January 2008, the index for intermediate goods increased 8.8 percent, and prices for crude goods jumped 31.3 percent."

Jeebus! Finished energy products, +22.6%! Finished consumer goods, +8.3%

Lag this.. .

Sources:
Producer Price Indexes - January 2008

Producer Prices in U.S. Increase More Than Forecast
Bob Willis
Bloomberg, Feb. 26 2008