Commentary
For reasons I don’t get, the whole of financial markets is obsessed with the Consumer Price Index (CPI) but the Producer Price Index (PPI) is largely ignored. It hardly makes the headlines.
That makes no sense because everything we consume (except maybe bugs) has to be produced. The consumer experience of inflation is downstream from the producer experience of inflation. That’s because we live in an advanced and complex economy with long production structures.
The PPI just came out and presented what is really the first seemingly solid good news in two years. The index for final demand actually declined 0.5 percent in March. Over twelve months the increase is 2.7 percent. That’s not yet the target of 2 percent but it is close. And this pertains to both goods and services. In the entire list of producer prices, I don’t spot anything that was hot in March….