The renewed surge in energy costs, and particularly the vertical inflection for fuel prices, showed up in Thursday’s closely-watched wholesale inflation report out of the US.
“Showed up” probably counts as a euphemism. “Crashed the party” might be more apt.
The headline MoM PPI print from the BLS was a blistering 1.3%, more than double consensus and faster than the monthly pace observed in April, when the data reflected the initial impact of the Iran war.
As the figure shows, the YoY rate picked up to 6.3%, above the May war peak and the quickest annual pace for wholesale inflation since December of 2022.
That’s very bad news coming as it does on the heels of Wednesday’s CPI overshoot, and underscoring as it also does the self-evident notion that you can’t escape unscathed from a record-breaking surge in fuel costs.
And yes, September’s jump on the PPI energy gauge was a record, with the caveat that the series only goes back to 2009.
There’s the chart. The 10.8% gain from August to September was more pronounced than March’s advance.
Do note: That jump — on the energy index — was responsible for a 2.6% MoM advance for the overall goods gauge, which counted as the single-biggest increase on record. For the umpteenth time: Wars have consequences.
The services side was likewise a disaster. The overall services gauge rose 0.8% MoM, the quickest monthly pace since April.
More than half of that advance was attributable to trade margins, which is exactly what you don’t want to hear in the current environment.
Not surprisingly, the gauge that measures costs for transportation and warehousing services rose sharply. The 3.4% gain there nearly matched April’s advance. September’s print for that index counts as the third-largest ever.
I could go on. And I will. Core PPI rose 0.7% MoM, almost quadruple August’s pace and more than double consensus. On a YoY basis, that gauge rose 5%, the quickest since — checks notes — January of 2023. For context, consensus expected just 4.4%.
Forgetting the whole “Ok, bad, but what’s the read-across for the BEA’s recently-revised PCE price calculation?” discussion, this release was a disaster. A wholesale effing disaster.
Same cycle as Trump one. Comes in with things in decent shape. Runs everything into the ground. Leaves with the build on fire. Democrats clean up mess. Republicans blame them for it. Lazy Americans believe horse crap and repeat.
It’s all about the “Golden Age” now, can everybody just stop acting brand new to all of this?
Yet it’s profit-taking time in ZROZ… Seems the effing disaster was already foreseen and accounted for by Mr. Market. Seems maybe the true “consensus” was a bit different than what was published…so, kinda like MAGA politics (expect the opposite of what is promised)?