The consumer price index attempts to measure what consumers actually pay for the goods and services they buy. The producer price index measures what it costs businesses to create those goods and services. It can be viewed as a forerunner of the CPI, on the assumption that producer price increases will eventually be passed through to consumers. The PPI for January was released today and came in higher than expected, at .5% month-over-month and 2.9% year-over-year. The increase, however, isn’t in goods, which actually declined .3%, so not likely tariff-related, but in services. This was largely due to a somewhat arcane “trade services” component, which measures wholesaler’s margins. Energy and food prices fell. Overall, the report doesn’t seem that concerning, and the bond market did not react negatively. It appears that some of the primary causes are one-offs, that may not recur. (BLS Release)
