US Wholesale Price-Spike Worst in the Data, Even Services. But Further up the Producer Price Pipeline, Inflation Rages at 28%, by Wolf Richter

There’s a lot more inflation coming down the pike. From Wolf Richter at

Raging price pressures in the pipeline are heading for consumers.

Even as consumer price inflation has spiked at the worst rate in 40 years, far-worse inflation rages further up the price pipeline as it’s flowing toward consumer prices. Going up the inflation pipeline of goods and services from the Consumer Price Index (CPI), we first get to the producer Price Index (PPI) for Final Demand, and further up the price pipeline, we get to the four stages of the PPI for Intermediate Demand.

At Intermediate Demand Stage 1 industries, furthest up the pipeline, whose production creates the inputs for industries in Stage 2, prices exploded by 20.8% year-over-year (green line), according to the Bureau of Labor Statistics today. At Stage 2 industries, which create the inputs for industries in Stage 3, prices exploded by 28.1% year-over-year, the worst in the data going back to 2010 (red line). At Stage 3 industries, which create the inputs for Stage 4, prices exploded by 20.6% year-over-year (gray line). And at Stage 4 industries, which create inputs to Final Demand, prices shot up by 12.9% (black line):

These red-hot price increases up the pipeline in the four stages of Intermediate Demand are increasingly getting passed on to the next industry in line, and the price increases from prior months are now arriving at the Final Demand industries.

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