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To put it simply:

PPI is the Producer Price Index, while CPI is the Consumer Price Index.
The basic transmission chain is: rising raw material prices → higher factory production costs (PPI rises) → companies pass the costs on to retail prices → CPI rises!

Although this PPI reading came in at 5.4% year over year, part of it was caused by a low base during the same period last year.
Of course, today’s data, whether core, year over year, or month over month, all gave the same answer: inflationary stickiness is picking up.

PPI is a forward-looking indicator, while PCE is further downstream. Therefore, when the forward-looking indicator worsens, the market will judge that downstream indicators may also deteriorate.

The key point: PPI rising does not necessarily mean that CPI will be passed through,
but this time is different. Combined with the initial jobless claims data, employment remains highly resilient, giving companies the confidence to pass on costs. Therefore, the probability of PPI passing through to CPI is much higher this time than before.

So, now that you know today’s PPI, you can go study tomorrow’s CPI... OK, class dismissed.#PPI数据