In early September 2023 we reported on the Producer Price Index, the PPI. This price statistic takes a back seat to the Consumer Price Index in media reporting and the policy-setting agenda.
Close to our end of the pipeline, the prices of wholesale goods dropped 0.1 percent after rising 1.2 percent in February.
If you don't consider food and energy prices, the overall PPI was up 0.1 percent for the month.
Just for your information, the price of copper has been up 6 percent since the beginning of the month, and crude oil is up 2 percent.
The producer goods pipeline that was driving the decrease in Consumer Price Index inflation down from 9 percent to over 3 percent has clearly stabilized and is less likely to contribute to the Fed's meeting its 2 percent target.
The producer price pipeline is wide and deep, with each stage for each consumer price having multiple stages with an array of its own pipelines and warehouse inventories of inputs.
If commodity food inflation spreads throughout the entire category and if energy prices continue to strengthen, the Fed's immaculate disinflation to get back to its target without wrecking the economy and stock market is in serious doubt, especially with interest rates already heading higher and the price of gold at an all-time record high.
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