Healthcare Is The Biggest PPI Component With Over 3 Times Energy's Weight

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)

PPI Components List

Services

(Click on image to enlarge)

PPI Final Demand Top 6 Services

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

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