This might be somewhat preaching to the choir, but it’s the only way I know to help Treepers prepare their families according to very visible economic signals happening just over the horizon. Back in August, when we discussed the massive inflation that was climbing straight up, I warned everyone to look behind the finished good prices, into the prices of origination and intermediate goods. {Go Deep}
The “producer price index” is essentially the tracking of wholesale prices at three stages: Origination (commodity), Intermediate and Final. The final product inflation rate in July (reported in August) was alarming at 7.8%. However, we warned of much higher flowing into the supply chain.
Today, The Bureau of Labor and Statistics (BLS) released stunning price data for October [DATA Here], showing a dramatic 8.6% price increase in Final Demand products at the wholesale level. As expected prices are still going up, and there’s no end in sight, because the raw material inflation is still higher than current.
[BLS] “The Producer Price Index for final demand increased 0.6 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 0.5 percent in September and 0.7 percent in August. (See table A.) On an unadjusted basis, the final demand index rose 8.6 percent for the 12 months ended in October.” (more)
I modified Table A (final demand product pricing) taking out some of the noise to make it a little easier to see the big picture of what is happening.
When you see the wholesale level of prices almost double the increase in consumer level inflation rate, you can predict that consumer prices will likely go even higher. Future finished goods at a retail level will carry the current wholesale price increase.
Stuff costs a lot now… and because the inbound stuff to make the finished goods is still climbing in price…. stuff is about to cost even more. You can see this in the inflation rate of intermediate goods which I have highlighted below.
(more…)
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