This morning's release of the October Producer Price Index (PPI) for Finished Goods was up 1.1% month-over-month seasonally adjusted, up from a 0.4% increase last month. It is at 11.2% year-over-year, down from an 11.5% increase last month, on a non-seasonally adjusted basis.

The September PPI for Final Demand was at 0.2% month-over-month seasonally adjusted, unchanged from a 0.2% increase last month. Investing.com MoM consensus forecasts for Final Demand were for 0.4% headline and 0.3% core.

Here is the summary of the news release on Final Demand:

The Producer Price Index for final demand increased 0.2 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in September and were unchanged in August. (See table A.) On an unadjusted basis, the index for final demand advanced 8.0 percent for the 12 months ended in October.

In October, the rise in the index for final demand can be attributed to a 0.6-percent advance in prices for final demand goods. In contrast, the index for final demand services decreased 0.1 percent.

Prices for final demand less foods, energy, and trade services advanced 0.2 percent in October following a 0.3-percent rise in September. For the 12 months ended in October, the index for final demand less foods, energy, and trade services increased 5.4 percent. More…

Finished Goods: Headline and Core

The BLS shifted its focus to its new "Final Demand" series in 2014, a shift we support. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core. Since our focus is on longer-term trends, we continue to track the legacy Producer Price Index for Finished Goods, which the BLS also includes in their monthly updates.

As this (older) overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.

FRED® Graphs ©Federal Reserve Bank of St. Louis. All rights reserved.

As the next chart shows, the Core Producer Price Index is far more volatile than the Core Consumer Price Index. For example, during the last recession producers were unable to pass cost increases to the consumer.

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