Wholesale prices rose 0.4% in September, more than expected as inflation persists

[BumRushDaShow]

Last edited Wed Oct 12, 2022, 10:23 AM - Edit history (1)

Source: CNBC

Wholesale prices rose more than expected in September despite Federal Reserve efforts to control inflation, according to a report Wednesday from the Bureau of Labor Statistics. The producer price index, a measure of prices that U.S. businesses get for the goods and services they produce, increased 0.4% for the month, compared with the Dow Jones estimate for a 0.2% gain.

On a 12-month basis, PPI rose 8.5%, which was a slight deceleration from the 8.7% in August. Excluding food, energy and trade services, the index increased 0.4% for the month and 5.6% from a year ago, the latter matching the August increase.

Inflation has been the economy’s biggest issue over the past year as the cost of living is running near its highest level in more than 40 years. The Fed has responded by raising rates five times this year for a total of 3 percentage points and is widely expected to implement a fourth consecutive 0.75 percentage point increase when it meets again in three weeks.

However, Wednesday’s data shows the Fed still has work to do. Indeed, Cleveland Fed President Loretta Mester on Tuesday said “there has been no progress on inflation.” Following the PPI release, traders priced in an 81.3% chance of a three-quarter point hike, the same as a day ago. Stock market futures trimmed gains following the news, while Treasury yields were little changed on the session.

Read more: https://www.cnbc.com/2022/10/12/producer-price-index-september-2022.html

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PPI for final demand advances 0.4% in September; services and goods both rise 0.4% https://bls.gov/news.release/ppi.nr0.htm
#PPI #BLSdata
8:33 AM · Oct 12, 2022

Breaking... Now being updated.

Previous update -

Wholesale prices rose more than expected in September despite Federal Reserve efforts to control inflation, according to a report Wednesday from the Bureau of Labor Statistics. The producer price index, a measure of prices that U.S. businesses get for the goods and services they produce, increased 0.4% for the month, compared with the Dow Jones estimate for a 0.2% gain.

On a 12-month basis, PPI rose 8.5%, which was a slight deceleration from the 8.7% in August. Excluding food, energy and trade services, the index increased 0.4% for the month and 5.6% from a year ago, the latter matching the August increase; excluding just food and energy, PPI was flat in September.

Inflation has been the economy's biggest issue over the past year as the cost of living is running near its highest level in more than 40 years. The Fed has responded by raising rates five times this year for a total of 3 percentage points and is widely expected to implement a fourth consecutive 0.75 percentage point increase when it meets again in three weeks.

However, Wednesday's data shows the Fed still has work to do. Indeed, Cleveland Fed President Loretta Mester on Tuesday said "there has been no progress on inflation." Following the PPI release, traders priced in an 81.3% chance of a three-quarter point hike, the same as a day ago. Stock market futures trimmed gains following the news, while Treasury yields were little changed on the session.

Original article -

The producer price index was expected to rise 0.2% in September, according to Dow Jones estimates.

This is breaking news. Please check back here for updates.

[Roy Rolling]

1. "More Than Expected"?

WTF? Such a bullshit headline by CNN.

When reporting a news event, “more than expected as inflation persists” is an opinion added.

I have my own opinion, thanks, and I was expecting more than the actual number, and expecting inflation to just vanish and not “persist” is also bullshit.

Sorry, CNN, I’m on a rant this morning.

[brooklynite]

2. Its news about an informed opinion. Do you have one?

Economic forecasters are always estimating what they expect a company, a nation, an economic sector to do. The markets respond to forecasts and their accuracy, so its a relevant part of the story.

[BumRushDaShow]

3. I know most of these business analysts

do their crystal ball "predictions" and outlooks for what they think will happen so they can test their statistical models and have something to discuss for how things are doing in the short term/mid term/long term. So this is just par for the course! They have done the "more than expected" headlines often, for their continual low-balling of the jobs-created numbers.

(ETA to note that this report is from CNBC and not CNN )

[mahatmakanejeeves]

14. The forecast figure was 0.2%.

https://www.democraticunderground.com/111694348

[Ford_Prefect]

4. Yeah right! Fuel has no effect on prices downstream?????????????????????

Excluding food, energy and trade services, the index increased 0.4% for the month and 5.6% from a year ago.

[BumRushDaShow]

7. I think they are saying that

knowing that fuel/food are the biggest drivers of prices - and particularly, the volatility in them due to factors that can create shortages, other less volatile products did see a rise in prices - although IMHO, that isn't a huge increase month-over-month.

I think the issue that they are seeing is the 1-month change that broke the "mini-trend" that had started in the August and September reports (for the summer months) -

July (for June) - https://www.democraticunderground.com/10142942644 (prices rose 0.3%)
August (for July) - https://www.democraticunderground.com/10142954587 (prices fell 0.5%)
September (for August ) - https://www.democraticunderground.com/10142968960 (prices fell 0.1%)

[twodogsbarking]

5. Excluding food, energy and trade services, the index increased 0.4% for the month

That clears things up.

[ancianita]

6. This is corporate driven pricing inflation, served up as some blame game at Dems for November.

It's always Wall St's numbers that dominate corporate media over labor's living wage increases, serving to keep business mentalities anti-Democratic and anti-working class, and pro-Republican and pro-Chamber of Commerce.

[jimfields33]

9. Yes but it happens every year in explaining the economy

If this was the first time they were doing it, your complaint would be valid. But year after year they do the same review of the economy. And every month they do a deeper look. This has been going on since forever.

[ancianita]

11. Yes but that fact doesn't get through to the voting public because every year media obstruct

the truth. You're right. Forever. And so what now? Say nothing? Knowing this and saying nothing contributes to what's called the "messaging problem."

As long as corporate war against liberal democracy and its economy goes on, we must not shut up about it. Beat this drum until the public sees the connect between corporate war on humans and corporate owned Republicans blame of Democrats.

Whenever, however many times they bring it up in media, bring this pricing inflation fact up every chance we get -- make it another reason for everyone who suffers, to vote against Big Corps and their bag men.

Standing by and being right is what loses elections.

[DownriverDem]

8. Husband's anger

about his IRA is so depressing. He keeps saying we were all scammed and there isn't enough time to make up for the loss. What can I say or do to make him feel better?

[jimfields33]

10. For one thing, tell him not to look every day.

Remind him of the drops we’ve had over history and increases that come soon after. I understand we’re all older, but does he really think that you’re going to end up in the poorhouse with the current drops? If he says no then tell him that things will be fine.

[progree]

13. The stock market is volatile. But over the last 10 years: up 11.4%/year. 20 years: 10.0%/year

Last edited Wed Oct 12, 2022, 12:34 PM - Edit history (3)

annualized average returns.

We've had worse bear markets since WWII: To take the 3 worst ones (as measured by the S&P 500 index):

Max ...........Time to
pullback ... recover..... Crash Name

48.4%     7.5 years,     73-74
49.1%     7.2 years,     DotCom
56.8%     5.5 years     Housing Bubble

The maximum pullback is the percentage drop between the pre-crash peak and the S&P 500 bottom.

The time to recover is the time from the pre-crash peak to when it reached that same level again.

Despite the bad periods, the total U.S. stock market, as measured by the Vanguard Total (U.S.) Stock Market Index Fund (VTSAX)
has grown 2.93-fold over the past 10 years, a 11.4% annualized rate of return. Through the October 11, 2022 close (yesterday).

Over the past 20 years, it has grown 6.7-fold, a 10.0% annualized rate of return.

https://finance.yahoo.com/quote/VTSAX/history
(using the adjusted close column which includes dividends)

For a longer view --
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

It seems like the real "scam" is the fixed income alternatives.

[nowforever]

12. Of course it went up

The Fed has raised interest rates these last months by over 3%.
That increases the price of EVERYTHING....it does not decrease the price. The cost of mortgages, cars, loans, equipment, machinery, transportation....goes up when you make money more expensive. Raising the rate automatically makes everything cost more and nobody ever says that...they instead say " They are raising the rate to fight inflation" and people without thinking go O.K. The THEORY behind it is ..if I make things cost more it will then make them to expensive to buy...I will stop purchasing things...demand goes down and businesses will fire workers and reduce inventories because nobody is buying my goods. This results in rising unemployment and a recession. And when finally everyone is suffering the price of goods and services will be lowered so producers can sell things that nobody can buy at current high price. This whole process takes several years to work...because you cause a recession and job loss which takes a year or so to happen. The current inflation problems are driven by the rise in the cost of a barrel if oil ( energy cost is biggest factor in inflation) and pandemic supply chain disruptions now add in the Ukranian War. Raising the cost of everything by raising interest rates( which is inflation)...is actually the
stupidest strategy there is.

[FBaggins]

15. You've confused two different concepts

When interest rates rise, it influences the monthly expense related to items that are purchased with long-term debt (upwards of course), but that does not mean that the price of that thing necessarily rises.

The most straightforward example is housing. A 30 year mortgage on a $300k home (with 20% down) had a PI of about $950 late last year. The same $300k purchase now (with rates around 7.5%) is over $700/month higher. But that isn't the same thing as the price of the home increasing by 75%. In fact, it very likely falls.

Put another way, a buyer with $60k to put down and the ability to pay $950/month could buy a $300k home less than a year ago... but today can only qualify for about a $200k home.

Home prices change for a number of factors, but all else being equal they will fall substantially as interest rates rise.

The same is true throughout other markets. The same amount of land exists but the cost to finance the purchase of land has gone up dramatically. So the prise that land sells at must necessarily fall unless other factors change.

In short - there is a difference between "make things cost more" (meaning what you have to pay monthly to finance them) and the price at which that thing trades in the market. And those two figures absolutely can move in opposite directions as rates rise.

[Samrob]

16. Corporate bosses are doing their damnedest to not look obvious about trying to hurt Biden.

They are pricing everything to hurt the working man but they be over the tolerable limit. Lots of stuff on shelves in my neighborhood. People have stopped buying a lot of stuff. I believe Halloween will be a bust.

[onenote]

17. As is correctly pointed out, blaming Biden for inflation ignores that inflation is a global issue.

But that also takes the wind out of the claim that prices are being raised to hurt Biden (ignoring that prices are increasing worldwide).