PPI hot too but extrapolation begins into faulty PCE/Claims situation remains the same

January PPI rose .4% headline m/o/m and .3% core about as expected (in isolation) but that wasn’t the only news because December was revised up sharply (annual revisions) with the headline rate up by .5% instead of .2% initially. The core rate was revised to a gain of .4% from .1%. This brings the y/o/y gain in January to 3.5% and a core rate of 3.6% vs 3.5% and 3.7% in December respectively.

Energy prices rose 1.7% m/o/m after a 2.2% rise in the month before though remain flat y/o/y. Diesel fuel in particular drove this along with jet fuel. Food prices jumped 1.1% m/o/m and by 5.5% y/o/y. Eggs by the way saw a price gain of 44% from December.

Core goods prices continue to show signs of bottoming, rising .1% m/o/m (no more disinflation for months now) and by 2% y/o/y.

On the services side, prices rose .3% m/o/m and 4.1% y/o/y. Transportation prices in particular were up notably, up 1.4% m/o/m for rail, 1.3% for trucking and .6% for air cargo as everyone rushed to get goods shore side before tariffs kicked in. Also, ‘traveler accommodations’ spiked by 5.7% which makes up “over one-third of the January rise in the index for final demand services.” Pricing for auto retailing, apparel/jewelry/footwear/accessories retailing, along with telecom services rose too. They dropped for securities brokerage/investment advice along with physician care.