00:00We come in hotter than anticipated with the PPI for final demand up half a percent, the same as
00:05in December. The forecast was for a three-tenths rise. Take out food and energy, and we're up
00:11eight-tenths after seven-tenths last month. And take out trade to that, and you're up three-tenths.
00:17That one's down just a little bit. Last month, we saw a big rise in trade services, and that is
00:24not happening this month. On a year-over-year basis, headline 2.9, ex-food and energy is 3.6,
00:32and ex-food and energy trade 3.4. The core rate, the 3.6, is a significant increase over the
00:413.3%
00:42we saw last month, while the 2.9% headline down a tick on a, I guess, basis effect from
00:49last month.
00:50But these are all important, not just for the headline numbers, but because a lot of the PPI
00:55feeds into the PCE, which is, of course, the Fed's indicator.
00:58Mike's going through the numbers for us. Upside surprise across the board here on PPI. Mike,
01:02you're digging into it. What do you see?
01:04Well, a couple of the things that feed into PCE are up. Of course, I don't have the exact way
01:13they
01:13will feed in, in terms of what that will mean. But portfolio management, which has been a problem,
01:17up 1.5%, and international airfares, 4.3%. So some significant rises in some of the things that
01:25will feed into the PCE numbers. And given what we're seeing here on the headline,
01:30it pretty much guarantees that the January PCE numbers are going to come in somewhere around
01:39three or north of three. And that's not going to give the Fed any kind of reassurance that inflation
01:44is going toward their target.
Comments