A producer price index inflation spike is on the way too
|As with the CPI, a PPI year-over-year inflation spike is baked in the cake.
Producer price index month-over-month April 2020
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PPI: -1.1%.
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2020 Goods: -2.8%.
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Services: -0.4%.
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Energy: -17.3% .
Producer price index month-over-month February 2021
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April 2020 PPI: 0.5%.
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April 2020 Goods: 1.4%.
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April 2020 Services: 0.1%.
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Energy: 6.0%.
Q: Why does Energy have such a small impact on the PPI?
A: The following chart explains.
PPI final demand weights
Energy is 15.5% of goods but only 5.0% of the overall PPI.
PPI year-over-year
Producer price index year-over-year April 2020
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PPI: -1.5%.
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Goods: -5.2%.
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Services: +0.3%.
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Energy: -30.7%.
Producer price index year-over-year February 2021
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PPI: 2.8%.
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Goods: 3.4%.
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Services: 2.5%.
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Energy: 5.5%.
What's going to happen?
The year-over-year comparisons in March, April, and May are going to show huge percentage year-over-year jumps, especially April and May due to comparisons vs. the initial pandemic numbers in Spring of 2020.
Services will act as a bit of a stabilizer given they constitute 66% of the PPI, but the energy numbers are so huge they will have a very noticeable impact.
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