You have to be careful about which series you are looking at.Here are four measures of monthly/monthly PPI inflation (latest freeddiscuss here).
figure 1: PPI month-on-month inflation for final demand (blue) (not annualized) [FRED series PPIFIS], PPI for all commodities (brown), PPI for final demand, manufactured goods (green), PPI for final demand excluding food and energy (red). Recession dates as defined by NBER are shaded from peak to trough in gray. Source: BLS, NBER, and author’s calculations.
The FRED collection PPIACO is a collection that dates back to 1913. For those of us who came to know about PPI in the 1980’s and 1990’s, this series is what it’s called – Commodity Measurements Only. For example, in my paper on exchange rate determination in the 1990s, I would use PPI as a proxy measure for tradable commodity prices and CPI as a proxy measure for non-tradable commodity prices.
An important aspect of this PPI measure is that it includes prices at different stages of production; therefore, multiple counts are made for the same product at different stages (eg, intermediate versus final).
The core measure is not directly identified, especially if one has an aversion to reading explanatory notes (or just aversion to reading in general). When looking at indices that exclude energy and food, there are (at least) a few indicators that behave quite differently.
figure 2: PPI month-on-month inflation (not annualized) for final demand (excluding food and energy) (blue) [FRED series PPIFES], PPI of final demand manufactured goods excluding food and energy (pink). Recession dates as defined by NBER are shaded from peak to trough in gray. Source: BLS, NBER, and author’s calculations.
So make sure you know what PPI you’re looking at (and what others are referring to). The FRED series PPIFIS and PPIFES (Final Demand and Final Demand Excluding Energy and Food) are the most frequently cited (implying that the people running FRED gave them specific mnemonics, and the Bloomberg survey cited both series).
