PPI Inflation

Wow. I knew that energy prices had risen lately, but this inflation report still surprised me:

The Bureau of Labor Statistics of the U.S. Department of Labor reported today that the seasonally adjusted Producer Price Index for Finished Goods advanced 1.7 percent in October.

…Among finished goods, prices for energy goods turned up 6.8 percent in October, following a 0.9-percent decline in September. The finished consumer foods index rose 1.6 percent, compared with a 0.1-percent increase in the prior month. By contrast, prices for finished goods other than foods and energy advanced 0.3 percent in October, the same rate of increase as in September.

Of course, the sharp rise in energy costs is due to the October run-up in crude oil prices, which has since been partially reversed (see chart below).

So we’ll almost certainly see a substantial fall in November’s PPI report to offset this one. The question is whether it will completely offset this one, or only partially…