Once again producer prices confirmed that the only significant problem in inflation is shelter.

In December commodity prices declined -1.3%. For finished goods they declined -1.2%. Even producer prices for services were unchanged:

(Click on image to enlarge)

On a YoY basis, commodity prices are down -3.2%, finished goods prices down -0.2%, and producer prices for services up 1.8%:

(Click on image to enlarge)

Needless to say, none of these suggest any producer inflation pressures in the pipeline at all. Here is what final goods producer prices (blue), headline consumer prices (red), and consumer prices excluding shelter (gold) look like since the energy inflection point of June 2022:

(Click on image to enlarge)

Producer prices are up only 1.4% since then, and CPI less shelter up 1.9%, vs. headline consumer prices up 4.8%.

The only real inflationary issue in the US economy is shelter as measured by the CPI. Paradoxically, high interest rates, which depress homebuilding, do not help this issue at all.

More By This Author: