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Thread: chart of the week - inflation's leading indicator

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    Banned Melonie's Avatar
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    Default chart of the week - inflation's leading indicator

    from



    (snip)"The GDP-weighted PMI for prices has historically been an excellent indicator of inflation. It would seem that the drop in the year-on-year headline CPI inflation rate from 2.7% in January to 2.2% in February was temporary phenomenon as the PMI indicator indicates inflation of closer to 3% over the next month or two."(snip)




    (snip)"However, when factoring in the absolute change in the oil price from a year ago, CPI could overshoot to a number in excess of 3%."(snip)


    The Purchasing Manager's Index essentially tracks the prices that corporate purchasing dep'ts are paying for necessary 'inputs' to their business. This theoretically provides a leading indication of rising consumer prices, since it usually takes some amount of time for the rising 'input' costs to translate into higher wholesale / retail prices.

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    God/dess Zofia's Avatar
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    Default Re: chart of the week - inflation's leading indicator

    I wish there was at least one more bit of inflationary pressure in the economy. Right now, the PMI is it. How nice if employment would increase or better yet, wages and hours.

    Z

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