Total PPI 2.4% vs 2.6% y/y Bloomberg consensus (0.1% vs 0.4% core.) Signal or not for future core CPI?

Figure 1: Headline CPI m/m annualized inflation (black), core CPI instantaneous (T=12, a=4) (blue), core PPI instantaneous (T=12, a=4) (tan). NBER defined peak-to-trough recession dates shaded gray. Source: BLS, NBER and author’s calculations.

While there is some evidence that PPI feeds into CPI in a sequential manner, as discussed in this post, it’s not likely to be a strong effect. For core measures, it seems even weaker. In non-pandemic samples, one can’t reject Granger non-causality going both ways. For full available sample (2010-2023M06), one can reject non-causality going both ways.

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