The Government Says PPI Dropped: What Does The Mean Exactly?

After a mixed picture from CPI data yesterday, PPI (Producers Price Index) was expected to continue to decline for May, and it did big time, at least on the top line. Headline PPI fell 0.3% in May. It was more than the 0.1% expected drop and dragged the Year-on-Year PPI down to 1.1%.the lowest since 2020.

But there is a catch: 60%  of the May decline in final demand for goods can be traced to a 13.8% drop in prices for gasoline. View this through the prism that, despite reports that the Biden admin is looking to buy a 'colossal' 12mm barrels of oil to refill the Strategic Petroleum Reserve,  they drained 1.9mm barrels from the SPR last week, marking the 11th straight week and 100s of millions of barrels drained in the aggregate to push down the price of gas.

Plus, a slowing PPI is not really great as media spinsters make it out to be. Slowing PPI means less activity flowing across the supply chain and a slowing economy, as evidenced by a 2.1% drop in the cost of freight trucking.

The DAPTake: We don't see this report as very good news at all, and the numbers are cooked anyway