It does not appear as if inflation is going anywhere soon as the Producer Price Index almost hit double-digits to end the year, according to the Bureau of Labor Statistics…(BLS)
- M-O-M: The Producer Price Index for final demand increased 0.2 percent in December after advances of 1.0% in November and 0.6% in October.
- Y-O-Y: Final demand prices moved up 9.7% year-over-year, the largest calendar-year increase since data were first calculated in 2010.
The good news, if you want to call it that, is that price growth did slow significantly but the bad news is prices are still moving up. Obviously, CPI lags PPI which makes sense. When producers pay more for goods they eventually pass that on to consumers. This is evident in the charts below. CPI and PPI aren’t completely chained because producers don’t always past all costs on to consumers. CPI, therefore, isn’t destined to reach 9.7%, but it could. As long as producer prices are rising, consumer prices will follow. It doesn’t look like we have any relief for consumers in Q1 of 2022.