A look at what's driving the Producer Price Index (PPI) might surprise you. Energy is only 7th on the list.

PPI Percentage Weights 

I produced the above chart starting with a download of Producer Price Weights from the BLS.

The spreadsheet has over 1,500 items in 45 broad categories. I grouped any category with less than 1 percentage point weight into "other". 

PPI Components Weights List 

(Click on image to enlarge)

Services

(Click on image to enlarge)

PPI Notes

• Six of the top 10 PPI final demand components are services. 
• Healthcare, Wholesale Trade, Retail Trade, Transportation, Professional, and Investment Services comprise 48.84% of the entire 45-category list of PPI components. 
• Add in credit intermediation (#14) and Real Estate (#17) and the total is 52.27%.
• Investment services, credit intermediation, and real estate services comprise 7.04% of the PPI vs 4.98% for fuels, related products, and power.

PPI vs CPI

Healthcare Services are 17.75% of the PPI but only 6.97% of the CPI. 

The Fed and the BLS underweight healthcare costs in the CPI because someone else is footing the bill (corporations or the government via Medicare, Medicaid, or a state- or local-government sponsored plan).

Anyone buying their own insurance will tell you 6.97% is a ridiculous assessment of their consumer spending.

The Producer Price Index Jumps a Greater Than Expected 1.3 Percent

Yesterday, I reported The Producer Price Index Jumps a Greater Than Expected 1.3 Percent. 

Here is the line item that caught my eye: Two-thirds of the January advance in prices for final demand can be traced to a 1.3-percent rise in the index for final demand services. 

Curiously, One-fourth of the January advance in the index for final demand services can be traced to a 9.4-percent rise in prices for portfolio management.

As Reported, Consumer Price Inflation Is Lower Than Expected Once Again

Not that many people believe this, but As Reported, Consumer Price Inflation Is Lower Than Expected Once Again.