PPI: -4.3% YOY Through August, Core PPI +2.3% YOY. Inflation Fear Perks Up.

The US Producer Price Index, which measures inflation at the business and manufacturing levels of the economy, was +1.7% in August and -4.3% year-over-year through August. Excluding volatile oil and food costs from the readings, “Core” PPI for August was +0.2% and +2.3% YOY through August. You can also view and download historical PPI data by scrolling down to our Data section on the right side of the site.

Back in February, inflation wasn’t a concern and deflation was the primary worry. And in the last five months, it’s been a see-saw: Inflation fear in April, Inflation benign in May, fear in June, benign in July, now fear is perking up again. The +1.7% monthly figure was more than twice expectations of +0.8%. On surface level, market sentiment seems to be that inflation shouldn’t be an issue for some time because aggregate demand is compromised by weakened consumers and businesses. But bond still trade wildly as we see-saw back and forth on these two sentiments. On the one hand, some argue that the contributors to headline inflation PPI are largely from energy costs. But the largest contributor to the PPI increase this month was from manufacturing, which relies on energy to run. Also if we exclude energy and food, Core YOY PPI is +2.3% which is higher than the Fed’s 1-2% comfort zone. Today bonds are choppy and down a bit, bringing rates up. Stocks are up slightly. Markets await the CPI figures for tomorrow, which will show consumer inflation.