Chart, inflation : Producer Price Index at +18,6 % in june

This chart closes my “inflation tsunami” case for june (source Bureau of Trade and Economic Indices).

I’m sorry to have more bad news folks…

What is the PPI ? It “measures the average change over time in the selling prices received by domestic producers for their output“.

We could say that it’s the avant-garde of the inflation, the one you see around you, in your daily life… Those prices will fuel the prices of the goods at the end of the chain.

PPI is a precursor. Or a messenger.

You can see on the next chart that there is an obvious correlation between CPI (Consumer Price Index) and the PPI.

We touched the bottom in august 2007… Since then… it’s an explosion.

This is why the CPI (+8,9 % in june) will continue to increase in the coming months.

Those who say otherwise are deluding themselves. The PPI figures are a clear proof.

At such level, the businesses have to offset the increasing costs by increasing their own selling prices.

It’s Economy 101.

And it’s the inflation tsunami on the move.