Since the Great Recession, the Producer Price Index (PPI) has been irrelevant. Whatever price increases occurred – the supply chain simply absorbed. Price increases for the most part were not passed on to the consumer.
In the December, 2010 PPI release there is a big slug of increased costs in the pipeline, energy (aka fuel for your car, boat, truck, train – and, for many, fuel oil to heat their house). Because margins are small in the distribution chain, this cost will end up appearing in the CPI. The headlines from the press release:
The Producer Price Index for Finished Goods rose 1.1 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance followed increases of 0.8 percent in November and 0.4 percent in October and marks the sixth straight rise in finished goods prices. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 1.0 percent, and the crude goods index increased 4.0 percent. On an unadjusted basis, prices for finished goods advanced 4.0 percent in 2010 after climbing 4.3 percent in 2009.
CPI Surge Caused by Rising Energy prices by Steven Hansen
Producer Price Increase Typical for New Normal by Steven Hansen
Consumer Price Index Continues to Show Little Price Inflation by Steven Hansen