Producer Price Index from BLS, chart by Mish

Last month I noted the PPI cools with first decline in services in two years. 

That didn't last long. Please consider the BLS Producer Price Index report for November 2022. 

PPI Key Month-Over-Month Details

• The Producer Price Index for final demand advanced 0.3 percent in November, seasonally adjusted.
• Final demand prices also rose 0.3 percent in both October and September.
• Most of the increase in the index for final demand is attributable to a 0.4-percent advance in prices for final demand services. 
• The index for final demand goods inched up 0.1 percent. 
• Prices for final demand less foods, energy, and trade services moved up 0.3 percent in November after rising 0.2 percent in October.

The Bloomberg Econoday consensus was 0.2 percent month-over-month vs 0.3 percent actual.

PPI Year-Over-Year

Producer Price Index from BLS, chart by Mish

 PPI Key Year-Over-Year Details

• On an unadjusted basis, the index for final demand moved up 7.4 percent for the 12 months ended in November.
• Year-over-year, the PPI for energy is up 16.2 percent.
• Year-over-year, the goods PPI is up 9.7 percent.
• Year-over-year, the services PPI is up 5.9 percent.

The index for final demand less foods, energy, and trade services increased 4.9 percent.

PPI Final Demand, Intermediate Demand, CPI YOY 

Producer and Consumer price from BLS, the latter for October, chart by Mish

Prices Still Elevated

A long-term chart shows year-over-year prices are still elevated historically.

Producer and Consumer price from BLS, the latter for October, chart by Mish

Final Demand Services Details 

• The index for final demand services advanced 0.4 percent in November after edging up 0.1 percent in October. Leading the November increase, prices for final demand services less trade, transportation, and warehousing climbed 0.4 percent. Margins for final demand trade services rose 0.7 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) 
• Prices for final demand transportation and warehousing services declined 0.9 percent. 
• About one-third of the November rise in the index for final demand services can be traced to prices for securities brokerage, dealing, investment advice, and related services, which jumped 11.3 percent. 
• The indexes for machinery and vehicle wholesaling, loan services (partial), fuels and lubricants retailing, portfolio management, and long-distance motor carrying also moved higher. 
• Prices for transportation of passengers (partial) fell 5.6 percent. The indexes for automobile and automobile parts retailing and for traveler accommodation services also decreased. 

Final Demand Goods Details 

• The index for final demand goods inched up 0.1 percent in November following a 0.6- percent rise in October. 
• A 3.3-percent increase in prices for final demand foods was a major factor in the November advance. 
• The index for final demand goods less foods and energy moved up 0.3 percent. In contrast, prices for final demand energy decreased 3.3 percent. 
• The November advance in prices for final demand goods was led by a 38.1-percent jump in the index for fresh and dry vegetables. Prices for chicken eggs; meats; canned, cooked, smoked, or prepared poultry; and tobacco products also moved higher.
• The gasoline index fell 6.0 percent. Prices for diesel fuel, residential natural gas, and primary basic organic chemicals also declined.  

Services for Intermediate Demand

• The index for services for intermediate demand increased 0.6 percent in November, the fifth consecutive rise. Leading the November advance, prices for services less trade, transportation, and warehousing for intermediate demand moved up 1.1 percent. 
• The index for trade services for intermediate demand climbed 0.5 percent. In contrast, prices for transportation and warehousing services for intermediate demand fell 1.3 percent. 
• For the 12 months ended in November, the index for services for intermediate demand increased 6.7 percent, the largest 12-month advance since rising 7.9 percent in May. 
• Nearly 60 percent of the November rise in the index for services for intermediate demand can be traced to an 11.3-percent increase in prices for securities brokerage, dealing, investment advice, and related services. 
• The indexes for loan services (partial), portfolio management, fuels and lubricants retailing, cable network advertising time sales, and long-distance motor carrying also advanced. 
• Prices for arrangement of freight and cargo transportation dropped 15.2 percent. The indexes for broadcast and network television advertising time sales and for metals, minerals, and ores wholesaling also decreased.  

Processed goods for Intermediate Demand

• Prices for processed goods for intermediate demand moved down 0.9 percent in November, the fifth consecutive decline. 
• Leading the November decrease, the index for processed energy goods fell 3.7 percent. 
• Prices for processed materials less foods and energy declined 0.2 percent. In contrast, the index for processed foods and feeds advanced 0.7 percent. 
• For the 12 months ended in November, prices for processed goods for intermediate demand rose 7.7 percent. 
• Over one-third of the November decline in the index for processed goods for intermediate demand can be attributed to prices for diesel fuel, which fell 4.5 percent. 
• The indexes for gasoline, steel mill products, utility natural gas, primary basic organic chemicals, and industrial electric power also moved lower. Conversely, prices for meats rose 2.3 percent. The indexes for primary nonferrous metals and for inedible fats and oils also moved higher.

 Unprocessed Goods for Intermediate Demand

• The index for unprocessed goods for intermediate demand fell 3.2 percent, the third consecutive decrease. 
• Leading the November decline, prices for unprocessed energy materials moved down 7.8 percent. 
• The index for unprocessed nonfood materials less energy fell 0.7 percent. 
• Prices for unprocessed foodstuffs and feedstuffs advanced 1.1 percent. 
• For the 12 months ended in November, the index for unprocessed goods for intermediate demand rose 3.0 percent. 
• Leading the decrease in prices for unprocessed goods for intermediate demand, the index for natural gas dropped 15.8 percent. Prices for crude petroleum, corn, hay and hayseeds, citrus fruits, and carbon steel scrap also declined. 
• The index for fresh vegetables (except potatoes) jumped 43.1 percent. Prices for raw milk and for nonferrous metal ores also advanced.  

Final Thoughts 

Services prices jumped in November as did food. 

Note the 38 percent rise in vegetables for final demand. At the intermediate level, the index for fresh vegetables (except potatoes) rose 43 percent.

If food prices are rising at the producer level those prices rate to pass through to consumers.

The Fed will not be pleased with this report.

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