PPI "accelerated" in July

[Slimprofits]

http://www.reuters.com/article/2011/...77G2KC20110817

U.S. core producer prices rose at their fastest pace in six months in July...according to a government report on Wednesday that could stoke inflation fears.

http://www.bls.gov/news.release/ppi.nr0.htm

On an unadjusted basis, prices for finished goods moved up 7.2 percent for the 12 months ended July 2011.

[don]

Re: PPI "accelerated" in July

ZIRP is in there somewhere. Wonder what treasuries would be in a 'free market' ?

[GRG55]

Re: PPI "accelerated" in July

http://www.reuters.com/article/2011/...77G2KC20110817

U.S. core producer prices rose at their fastest pace in six months in July...according to a government report on Wednesday that could stoke inflation fears.

http://www.bls.gov/news.release/ppi.nr0.htm

On an unadjusted basis, prices for finished goods moved up 7.2 percent for the 12 months ended July 2011.

Anybody tell Mish?

[shiny!]

Re: PPI "accelerated" in July

At 7.2% how long does it take for prices to double?

[seanm123]

Re: PPI "accelerated" in July

Plosser from the Philly Fed was on Bloomberg Radio this morning, stating basically that the data did not support Fed's ZIRP till they cows come home statement.

http://www.bloomberg.com/news/2011-0...-mid-2013.html

[jiimbergin]

Re: PPI "accelerated" in July

At 7.2% how long does it take for prices to double?

about 10 years

[shiny!]

Re: PPI "accelerated" in July

about 10 years

Thanks. Dyscalculia sucks.

[Fiat Currency]

Re: PPI "accelerated" in July

about 10 years

That one doesn't get any easier for the rule of 72

[Slimprofits]

Re: PPI "accelerated" in July

The handy chart on the BLS page only goes back to July 2010, but it does tell us that PPI has been at least 3.3% for the last year and double that in some months.

[jiimbergin]

Re: PPI "accelerated" in July

That one doesn't get any easier for the rule of 72

No it doesn't! Of course, as a retired actuary, (although I knew the answer), I had to calculate it anyway! Always double check everything

[FRED]

Re: PPI "accelerated" in July

From an upcoming article from EJ:

The most recent PPI (Producer Price Inflation) numbers for July 2011 were issued today. As expected, Fed policy to prevent asset price deflation in the FIRE Economy is resulting in consumer price inflation in the Productive Economy. This can be clearly seen in food prices over the past seven months.

For example, in January of this year, annual price inflation for crude inputs into food manufacturing was 20%, for intermediate inputs 6%, for finished foods 4%, and consumer price inflation for food was 2%.

As of July 2011, annual price inflation for crude inputs into food manufacturing was 28%, for intermediate inputs 13%, for finished foods 8%, and consumer price inflation for food was 4%. The inflation rate for finished consumer foods and consumer prices of food has doubled in seven months as high and rising input price inflation works its way from producers to consumers.

The inflationary trend over the past seven months is unmistakable. Food prices are not "volatile." Rather, the price inflation has been continuous.

In my next subscriber article I explain in detail how Fed and fiscal policy is producing this result, as we forecast in 2008.

The Fed's bind is that it needs to expand money and credit to prevent asset price deflation in the FIRE Economy from spilling over into the Productive Economy. This is accomplished via zero interest rate policy (ZIRP), quantitative easing (QE), and fiscal stimulus. As asset inflation policy is barely succeeded in slowing the rate of asset price deflation in the housing market, the Fed is in no position to change this policy, especially with fiscal stimulus reductions coming from the recent deficit reduction bill. Bernanke this week committed to two more years of ZIRP for this reason.

The resulting food price inflation in the Productive Economy is indicative.

I forecast this outcome in my book The Postcatastrophe Economy: Rebuilding America and Avoiding the Next Bubble, and stated that the only way to prevent this result is to directly reduce debt levels in the FIRE Economy to eliminate the need for inflationary Fed policy to prevent debt deflation in the private sector.

[don]

Re: PPI "accelerated" in July

the only way to prevent this result is to directly reduce debt levels in the FIRE Economy to eliminate the need for inflationary Fed policy to prevent debt deflation in the private sector.

At the expense of the FIRE economy?

Fat chance of that

[Chomsky]

Re: PPI "accelerated" in July

Thanks FRED.

[WildspitzE]

Re: PPI "accelerated" in July

Thanks FRED.

+1... as i was reading the op of the thread i started to wonder how successful producers (and the rest of the chain) would be at passing this on to consumers (with their own balance sheet issues).

that said, food is our energy (a necessity) and thus i think producers have more power to pass things along. i wonder how successful producers in other segments are at passing this on... i also wonder if profit / price spread compression is first seen in the intermediate folks.

would be neat to be able to see what fred illustrates with two charts above with an animation with data over the last x years to see how prices flow through the chain in relation to events...i bet it probably flows like traffic, or springs.

[WildspitzE]

Re: PPI "accelerated" in July

that one doesn't get any easier for the rule of 72 :d

lmao.