Inflation Sign?
Updating the Economic Dashboard
One way the Economic Dashboard (TM) can work as a piece of journalism (and not just my homework prep. for the Colbert appearance) is as ongoing context for new economic news. So, for example, this new information about inflation relates to the Dashboard entry on wages and what they buy, but is also something new. So I’m creating an interim bullet point:
4.5 The Pipeline: What Businesses Are Paying Now That You'll Be Paying Soon.
On February 27, the stock market dropped sharply after a hotter‑than‑expected wholesale inflation report. That’s the prices businesses pay each other — for steel, for chemicals, for shipping containers full of clothes — are going up faster than anyone expected, not slower. That matters to you because businesses don't eat those costs. They pass them on. When it costs Target more to stock the shelves, it eventually costs you more to fill your cart.
In January, the Producer Price Index (PPI)— the government's measure of what businesses pay each other — rose 0.5% in a single month, nearly double the 0.3% rise economists were expecting. Strip out food and energy1, which bounce aroudn a lot, and it looks worse: that “core” number jumped 0.8% versus a 0.3% forecast, pushing the year‑over‑year core rate to about 3.6%, its highest level in roughly ten months.
Those prices aren't slowing down. Wholesale prices are re‑accelerating instead of gliding gently back toward the Federal Reserve’s comfort zone. The biggest jumps were sharp price increases in services and trade margins—the markups wholesalers and retailers charge—with especially big moves in categories you'd actually notice: like clothing and shoes, chemicals, telecom services, health and beauty products, and some food and alcohol, as companies begin passing more of their tariff and cost increases along the supply chain.
That catches my eye. Here’s why:
Since President Trump instituted his sweeping import taxes, there's been a prediction: prices will go up. And they have — the average family is paying more. But they haven't gone up as much as experts expected, and there's a specific reason. Businesses saw the tariffs coming and stockpiled inventory in advance, shipping out what they'd already bought at the old prices. That bought time. But warehouses empty. The expectation was that once businesses burned through their pre-tariff stock, they'd start passing the real cost increases along — and that the turn would come early in the new year. That's what this number suggests is happening.
Wall Street didn't treat this as a one-month blip. Investors read it as the turn — the moment the warehouse runs dry and the real costs start showing up on price tags. That's why the market sold off: not one bad number, but what one bad number says about the next six months.
It excludes food and energy because those prices swing around a lot month to month, often for reasons that have little to do with the underlying inflation trend (like a cold snap hitting crops or a temporary spike in oil prices). Economists and policymakers use “core” measures to strip out that noise so they can see whether broad, slow‑moving price pressures are building across the rest of the economy.
Businesses stockpiled AND WE stockpiled because we were still stung from the post-covid inflationary pricing. We knew what was coming.
Greedflation subsided somewhat after justifiable Covid-related issues settled but it never stopped, and of course very few products dropped to pre-Covid pricing. The whole tariff debacle just added another excuse to jack up prices again. I could walk thru Walmart and see almost everything increased suddenly by a $1 as if someone said “No idea what’s going to happen, eff it, raise everything a buck” before the tariffs were even activated. But when domestically produced products like milk and eggs have increased 25%, that is just pure greed. How can they blame that on tariffs?
More frighteningly, especially for those of us on fixed incomes, those prices will not go back down now even IF the tariffs are stopped. We have the Trump problem but we also have the problem of businesses taking advantage without justification and blaming it on tariffs or inflation but raising prices at percentages well beyond any inflation number or tariff number. Long term it seems the only way to stop them is to stop buying their products. Hence John’s observation about decreased prices of electronics and software. Problem is, people need to eat. It’s a bit harder to boycott groceries significantly other than around the edges, eg junk food, or trading healthy food for less healthy food. Even harder, it would seem, to inject any sense of decency into today’s corporations.
I was just saying to a friend that our social security COLA next year should be min 10% but that will never happen because there is too much gaming of numbers going on. And the one year we got an 8% COLA, the home/auto/health insurers immediately raised prices 30% or more. I understand why our government does not believe in ‘price fixing’ but how do we stop the madness? People are going to die.
The Chapwood Index .