The “Producer Price Index” (PPI) is essentially the tracking of wholesale prices at three stages: Origination (commodity), Intermediate (processing), and then Final (to wholesale). Today, the Bureau of Labor and Statistics (BLS) released April price data [Available Here] showing another 11.0% increase year-over-year in Final Demand products at the wholesale level. Last month when looking at internal economic activity that showed a contraction in consumer purchases of goods, we said pay attention to the service side of the ledger now. Knowing people have stopped buying ‘stuff’, if people are starting to run out of money, they will cut back in the service sector (dining out, etc). While the PPI focuses on prices, the PPI data for April shows exactly that service side contraction now taking place. Wholesale inflation in goods is determined heavily by higher costs for raw materials and processing. However, the rate of inflation within the service sector is more connected to what consumers can afford. Modified Table-A, look at the April difference between goods (1.3%) and services (0.0%): https://theconservativetreehouse.com/blog/2022/05/12/producer-price-inflation-continues-surging-at-11-percent-annualized-processed-food-increases-now-34-8-percent
