Producer price growth in the US came in warm for November, data released Thursday showed.
Blame eggs. No, seriously.
Here’s how the math breaks down. Producer prices rose 0.4% last month from October, twice the expected monthly gain. Some 60% of that increase was down to a 0.7% increase on the goods side of the equation. And a quarter of that increase was attributable to a 55% jump in the “chicken egg” gauge.
Suffice to say November’s PPI release had a chicken-egg problem. (If nobody else made that joke on Thursday, then shame on everyone.)
I’m not usually inclined to explain away adverse data, but as the BLS noted, substantially all of the increase on the goods side came from the final demand foods index, which rose 3.1% last month from October. If you just glance at the table, that sticks out like a sore thumb.
The “core” goods index, by contrast, rose a tame 0.2% for a fifth month, and PPI services prices likewise advanced just 0.2%, the slowest increase since July.
In my estimation, then, the 0.4% headline PPI “surprise” was a bit of a false optic. I’m not any sort of expert on eggs, but… well, I don’t think eggs will be the deciding factor when it comes to the trajectory of Fed funds going forward.
Still, it’s worth highlighting the figure below.
That’s just headline CPI and headline PPI measured on a 12-month basis. Both are at or near 3%.
The good news is, prices are falling if you exclude all the items and categories for which prices are rising.
“The good news is, prices are falling if you exclude all the items and categories for which prices are rising.”
You should take up speechwriting for our President-elect!
Good thing it’s Christmas time not Easter.
Nobody drinks eggnog anymore, anyhow
When a disease outbreak strikes commercial flocks, they ALL must be culled to prevent the disease from spreading further. Its serious.
Back in the late 70s when I was trading egg futures, the occasional scourge was Exotic Newcastle Disease. More recently it is being augmented by bird flu outbreaks (attn JL).
As far as I know, raising interest rates will do nothing to cure the cause of rising egg prices.
Hopefully no bird flu impact on flu vaccine production that is egg-based, still the dominant method.
Partly off topic. I paid $5 for 4 kiwi at Ralphs in Dana Point, CA. Visited Erie, PA and paid $5 for 15 kiwi, product of Escondido CA, about 100 miles away. Maybe no freight costs, sure. Gouging, the new best business practice. Eggs? Probably legit but betting once supply normalizes prices won’t fall very much. In the long run egg producers will make a nice profit off this bird flu problem – it pays to have poor health safety procedures! Cynical, I know.
Bird flu problem