Last edited Thu Aug 14, 2025, 12:56 PM - Edit history (1)
The values in the graphs are calculated using the actual index numbers, not from the rounded-off-to-a-single-digit monthly changes.
The annualization calculations also takes into account compounding.
As an example, the reported 0.9% increase for the PPI in July -- someone downstream annualized that by simply multiplying that number by 12 to get 10.8%
In contrast, I put in the index numbers from http://data.bls.gov/timeseries/WPSFD4 into my spreadsheet (via copy and paste).
June: 148.270
July: 149.671
% change: +0.9448978%
1.009448978^12 = 1.1194700 , then subtract 1 and multiply by 100% = 11.95%
So 11.95%.
Simply multiplying the 0.9448978% by 12 yields 11.34%
So the compounding added 0.61 percentage points to it
PPI
Core PPI (PPI less food, energy, and trade services)
I use the Core PPI less food, energy, and trade services because that's what the BLS highlights (and that was true pre-Krasnov too), so I am doing likewise. The idea of the core is to remove the volatile components that bounce up and down a lot from month to month, so that's another reason to use the core PPI less food, energy, and trade services to project FUTURE inflation trends, and that's why the Fed focuses on core measures.
12 month graphs from OP. The graph's labeling says the core is PPI less food, energy, and trade services
PPI http://data.bls.gov/timeseries/WPSFD4
Core PPI (wo food, energy, trade services) http://data.bls.gov/timeseries/WPSFD49116
Core PPI (wo food & energy) http://data.bls.gov/timeseries/WPSFD49104
You can see graphs at the above links too -- chose More Fomatting Options at the upper right of the page and then check boxes like 1 Month, 3 Month, 12 Month
Probably has a similar wide-eyed reaction to today's numbers.
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