The Producer Price Index rose 0.4% in September (against analysts’ expected rise of 0.2%), and it’s up 8.5% year-on-year.
This matters because the PPI reflects the prices—and price increases—that suppliers face for the components of goods that they must acquire in order to produce those goods. Those supplier prices are then passed up the supply chain to subsequent suppliers and on through to the final product that consumers buy.
That means that consumers can expect commensurate price increases—continued inflation—in the weeks and a few months into the future, a lag whose delay depends on the specific product being produced and sold/bought, but a lag whose outcome is unavoidable.
That’s not just a prediction with a high degree of confidence behind it, either. Much of that future consumer inflation is concrete because it’s built in.
The Bureau of Labor Statistics estimates that trillions of dollars in long-term contracts are pegged to versions of the PPI.