The news came out today courtesy of the Bureau of Labor Statistics (BLS) that the Consumer Price Index (CPI) rose 0.5 percent in Feburary of 2011. This rise comes on the heels of the BLS announcing that the Producer Price Index (PPI) rose 1.6 percent last month.
Now the CPI tracks the cost to the consumer (like you and me) of a basket of goods while the PPI tracks what it costs the producer to make those items.
Geek that I am, I have been tracking the ups and downs of the CPI and PPI since November of 2007, which is a month before the last recssion officially started.
For almost the first year (November 2007 to October 2008), PPI outpaced CPI so that producers were paying more to produce their items than it was costing us to buy the items. For example, if both PPI and CPI were 100 in November 2007, in October 2008 PPI was at 102.96 and CPI was at 102.93 while the high point for both figures was July 2008 (PPI = 106.67, CPI = 103.96).
Starting in November of 2008, the trend was reversed and CPI outstripped PPI so that it was costing us more to buy that mythical basket of goods than it was to produce it. That trend continued until January of 2010 when PPI was more than CPI (PPI = 104.18, CPI = 103.42) and continues to Feburary of 2011.
As it stands for last month, PPI is 109.60 and CPI is 105.50, a difference of 4.10 (there’s your number for the day). This is the highest difference between what producers pay and what we as customers pay.
Not sure what it means…just thought I would share.