By Tyler Durden
The smell of stagflation is strong this morning, because just as retail sales missed badly on both the headline and the core prints as noted separately, and as BofA predicted last night, PPI came in a hotter than expected, with both headline PPI (0.2%) and PPI ex food, energy and trade (0.4%) coming in higher than the expected prints of 0.1% and 0.2% respectively after a mixed picture from yesterday’s CPI print.
The index for final demand less foods, energy, and trade services climbed 0.4 percent in February, the same as in January. For the 12 months ended in February, core core PPI, i.e., prices for final demand less foods, energy, and trade services increased 2.7%, the largest rise since 12-month percent change data were available in August 2014.
More troubling, on an unadjusted basis, the final demand index increased 2.8% for the 12 months ended in February, clearly suggesting that input costs are starting to impact business who are unable to pass on rising prices to consumers, and instead are forced to shrink their profit margins as a result.
A breakdown of all key PPI components is below.
Looking at final demand services, a major factor in the …read more