The Producer Price Index (finished goods) prices increased 6.9% year-over-year in September 2011 (up from 6.5% in August) – and increased 0.8% month-over-month.
The reasons for the increase is both food and energy – but energy is the big item.
There is moderate correlation between crude goods and finished goods as shown on the graph below. Higher crude material prices push the finished goods prices up.
Econintersect has shown how the pricing changes moves from the PPI to the Consumer Price Index (CPI). This YoY change implies that the CPI – which will be released later this week, should come in around 3.5% YoY. Last month the CPI YoY change was 3.8% (analysis here).
Overall, the rate of price inflation for finished goods since April 2011 have remained between 6.6% and 7.2%.