For November, the Producer Price Index (PPI) was up 0.2%. This increase reflects that inflationary pressures are clearly the most acute danger to our economy at this time. The latest report, released by the Bureau of Labor Statistics, provides insight into price changes that producers receive for their goods and services. Together, this data is an early warning sign for what consumers could soon be facing, if they aren’t already.
As a reminder, the recent federal shutdown delayed the release of the PPI report. So too was the rollout of important economic data. The full report has more extensive data October. Yet, many price-update requests and submissions remain languishing in the pipeline. The retooled PPI for October came in exactly as expected, up 0.1% from September, with the year-on-year rate coming in at 2.8%.
In November, the PPI’s annual rate, which is the more relevant rate in this case, doubled to 3%. This is up from the recently revised 2.7% in September. This upward revision is a continuation of an alarming inflationary trend that is impacting industries across the economic spectrum.
Energy prices were the biggest driver in this latest jump, accounting for a whopping half of the PPI increase. Energy costs vary regularly, and increases in these costs can have an outsized effect on total production costs. Energy prices therefore become key for assessing inflationary pressures.
It is the most comprehensive measure of the average price changes that producers receive for all goods and services over time. This index is very valuable for economists and policy makers as they look at these economic conditions and try to make educated, informed policy decisions. A rising PPI typically signals potential increases in consumer prices in the future, thereby affecting purchasing power and economic growth.
The implications of these PPI figures go far deeper than what happens in the statistical swamp. They’ve largely been a symptom of larger economic forces at play, from supply chain disruptions to a post-pandemic consumer demand shift. According to the statistics, producers are definitely feeling increased expenses. These higher costs will likely be felt by consumers in the not-too-distant future, cutting into family budgets and consumer expenditures.