Bloomberg consensus M/M PPI, slightly higher than core. In m/m, q/q and y/y fields of view.
figure 1: MoM annualized PPI (final demand) inflation (blue), MoM (green), YoY (red), %. Recession dates as defined by NBER are shaded from peak to trough in gray. Source: BLS, NBER, and author’s calculations.
figure 2: MoM annualized core PPI (final demand) inflation (blue), MoM (green), YoY (red), %. Recession dates as defined by NBER are shaded from peak to trough in gray. Source: BLS, NBER, and author’s calculations.
Does PPI lead CPI? some pictures.
image 3: Quarter-on-quarter CPI (blue), PPI manufactured goods (tan), %. Recession dates as defined by NBER are shaded from peak to trough in gray. Source: BLS, NBER, and author’s calculations.
Figure 4: Quarterly core CPI (blue), core PPI manufactured goods (tan), %. Recession dates as defined by NBER are shaded from peak to trough in gray. Source: BLS, NBER, and author’s calculations.
Just by looking at the pictures, it’s hard to see if PPI leads CPI in any reliable way (in any case, it’s important to remember that CPI includes services, and these PPI metrics only cover end products).from my Published August 2021 CPI and PPI:
Does the PPI lead the US CPI? Clark (1995) Be skeptical that PPI provides additional system predictive power.
Some analysts expect the recent rise in crude oil and intermediate product prices to travel through production chains and generate higher consumer price inflation. While simple economics suggest that such pass-through effects may occur, more sophisticated reasoning and careful consideration of the construction of the PPI and CPI data suggest that any pass-through effects are likely to be weak. Consistent with this more sophisticated analysis, empirical evidence also suggests that production chains only weakly link consumer prices to producer prices. PPI changes are sometimes helpful in predicting CPI changes, but this cannot be done systematically. Therefore, the recent rise in some producer price indices does not by itself herald a rise in the CPI.
Caporale et al. (2002) Using a more formal multivariate approach, it is concluded that for the G-7 economies, the PPI does lead the CPI. It remains to be seen whether these findings still hold true in the current environment (and newer versions using PPI).
in my april postI’ve noticed growing evidence that PPI Granger causes CPI in a sample that includes the pandemic.
