From The Market Ticker
The Producer Price Index for finished goods rose 1.1 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods advanced 1.7 percent in August and moved up 0.3 percent in July. At the earlier stages of processing, prices received by manufacturers of intermediate goods rose 1.5 percent in September, and the crude goods index advanced 2.8 percent. On an unadjusted basis, prices for finished goods climbed 2.1 percent for the 12 months ended September 2012, the largest rise since a 2.8-percent increase for the 12 months ended March 2012. (See table A.)
So — big surprise — we’re once again not worrying about prices, because only those things nobody needs to buy are going up in price.
There is a convergence in this report, however, that is (mildly) positive — crude goods came down in price increase, while intermediate goods went up. The convergence is “good” in that it tends to fade off some of the margin compression for those entities that are involved in producing those intermediate goods.
As for everyone else, it’s still a big move; a ~2.8% price change monthly (crude goods) is a 39% annualized price increase. A 1.5% monthly change is a 20% annualized price change.
“How can this little itty bitty price change hurt me”, you might ask?
Do you now understand?
And if you’re in that group of Americans that spend more than the “allocated” CPI percentages on food and energy (that would be those with incomes under the median income) then you’re really feeling it.
Say thanks to Congress next month — they’ll appreciate it.