Producer price figures show wholesale inflation is up, up and away
* The headline PPI jumped 1.4% in May. That was seven times the 0.2% increase in April and hotter than the 1% gain that was expected. Worse, wholesale inflation is rising at a 7.2% year-over-year rate. That's up from 6.5% a month earlier and just shy of the 7.4% cycle high set in January.
* The "core" PPI rose 0.2%, in line with the 0.2% forecast and down slightly from the 0.4% rise in April. I am sick and tired of hearing everyone talk about figures that exclude food and energy, but the market pays attention to these numbers, so I have to as well. The core PPI was up 3% from a year ago, tying May's figure, which in turn was the highest going all the way back to December 1991 (3.1%).
* At the intermediate stage of production, prices were up 2.9%. Crude goods prices jumped 6.7%. "Core" inflation at the intermediate level was +2%, the single-biggest monthly gain going all the way back to January 1980 (+2.3%). "Core" crude goods inflation was +5%. The year-over-year figures look much worse. Inflation is running at 12.6% for intermediate goods and 41.5% for crude goods. Those are the worst readings since December 1980 and March 2003, respectively.
I'm going to keep my commentary short and not-so-sweet. Anyone who claims inflation is "well-contained" needs to have his or her head examined. These figures stink, through and through. The Fed has to normalize interest rates, and soon.