I typically do not pay much attention to producer prices. Sometimes they do lead consumer prices, but since the turn of the Millennium more often they have been coincident. But with the onset of tariff wars, they may set off some of the first alarm bells.

And that may have been the case as of February’s report, released this morning. While final demand prices were unchanged, commodity prices increased 1.0% in the month alone. Combined with January, commodity prices have already risen 2.5% this year, the biggest two month increase since spring of 2022:

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The YoY graphs show similar inflationary pressures apparently beginning to build:

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On a YoY basis, commodity prices are higher by 1.9%, and final demand prices by 3.2%. Note that commodity prices include gas and oil, and are typically much more volatile than final demand producer prices. 

Getting into trade wars with the rest of the world, with escalating retaliatory tariffs, plus taking a chainsaw to employment in federal agencies and their counterparty contractors: what could possibly go wrong?

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