Annual PPI Core Inflation Was 2.5% in July

August 17, 2011 2:29 PM | 1 min read | Make a Comment

The report on producer prices for the month of July was released today by the BLS, here is one observation:

1. Annual core PPI inflation (finished goods less food and energy) was 2.5% in July, the highest in two years, but below the 4.7% peak in late 2008, and far below the double-digit rates of the early 1980s (see chart above).

As I have discussed before, the inflationary periods of the 1970s and 1980s were always associated with price increases "across the board" for everything including: energy, food, housing, wages, interest rates, housing prices, and even the core components of the PPI and CPI. We still don't have that pattern reflected in today's prices, wages and interest rates.

One example: the current prime rate is 3.25%; in the inflationary 1980s it was above 20%.

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