Folks, I’m sipping my coffee and reading about the latest inflation numbers, and let me tell you, it’s a wild ride. The Producer Price Index, which tracks price changes received by US producers and manufacturers, increased 5.4% in the 12 months that ended in August. That’s a 0.6% acceleration from 4.8% in July, according to the Bureau of Labor Statistics data released Thursday. I’m no economist, but that sounds like a lot of numbers, and not all of them are good.
The monthly basis prices across goods and services rose 0.4% in August from 0.1% in July, which is exactly what economists expected. I’m not sure if that’s a good thing or a bad thing, but it sounds like the experts were prepared for it. Prices for goods alone rose to 1.1%, which is a big shift from July when they fell by 0.4%. It seems like energy prices are the culprit here, with a 4.2% monthly rise in August. And with crude oil futures surging in September, it doesn’t look like things are going to get better anytime soon.
Somewhere in Atlanta, a producer thought this sounded terrifying, and they’re probably right. The global oil benchmark, Brent crude, went above $105 a barrel on Thursday for the first time since late May. That’s a lot of money, and it’s going to affect a lot of people. But, you know, at least the “core” inflation rose at a more muted annualized rate of 4.6% versus 4.3% in July. I’m not sure what “core” inflation is, but it sounds like it’s not as bad as the other kind.
Thursday’s report could complicate the Federal Reserve’s efforts to bring inflation down to its 2% target. The Fed officials meet next week to discuss monetary policy, and investors are expecting them to raise rates at least once before the end of the year. The chances of a rate hike occurring at next week’s meeting rose to 70% from 64% after Thursday’s PPI report was released. I’m no expert, but it sounds like the Fed has its work cut out for it.
The PPI serves as a potential bellwether for what consumers could experience in the near future. Thursday’s report comes one day ahead of the August Consumer Price Index data, which holds greater significance this week after Fed Governor Christopher Waller said stubborn inflation would push him to “consider a rate hike.” Economists are expecting Friday’s CPI report to show the annual rate of price changes slowed to 3.3% last month from 3.4% in July. On a monthly basis, though, they’re expecting consumer prices to jump by 0.4% from July’s 0.1% rate. It’s all very confusing, but I think it means that prices might go up, and that’s not good for my wallet.
On a monthly basis, core inflation slowed to 0.2% in August from 0.3% the prior month. That means that the higher energy costs aren’t fully working their way through many other input costs for businesses. Outside of energy, pricing pressure is also coming from electronic component costs, which leapt by 3.4% last month and are up 27.6% for the year. It’s a lot to take in, but it seems like the economy is a complex beast, and it’s hard to predict what’s going to happen next.
In conclusion, the inflation numbers are a mixed bag, and it’s hard to say what’s going to happen next. The Fed is going to have to make some tough decisions, and consumers are going to have to be prepared for potentially higher prices. But hey, at least my coffee is still affordable, and that’s all that really matters, right? As I finish my cup, I’m reminded that inflation might be a serious issue, but it’s also a great excuse to drink more coffee and complain about the economy.
Armchair patriot. Believes in the free market, cold beer, and that there’s always a guy named George behind every CNN segment.
Former remote-throwing champion turned #1 couch commentator on liberal panic in the media. Born in Texas (or so his mug says), he earned a degree in Fake Newsology & Beer Philosophy from YouTube University.
