Commentary
It’s beyond me why the Consumer Price Index (CPI) garners so much attention from the press, but the statistical release the following day barely makes a dent in the news cycle. That is the Producer Price Index (PPI). In many ways, the PPI is more important because it forecasts the plight of the consuming public, reveals much about profit margins, and gives a picture of the real costs along the production structure that sustains prosperity as we know it.
The PPI for June 2022 is out and, as we might expect, it is terrible. It is the second worst rate of increase on record, with the first being March 2022. It also shows the trendline is not good. The year-over-year rate of increase came in at 11.3 percent. This is well ahead of the CPI and reveals that we are nowhere near done with inflation. There’s much more to come, and something much worse too: a serious margin squeeze in profitability….