Markets Get Cold Feet Even as More Good News Rolls In

Everything’s Coming Up Roses

If you wanted evidence that the worst of inflation might be over, the last two days have offered quite a litany. Following Wednesday’s surprisingly quiescent consumer price inflation data (the headline index didn’t rise at all from June to July), Thursday brought more good news.

Producer prices have surged thanks to the oil market and supply chain snarl-ups. On the “finished goods” basis traditionally used, PPI in June reached its highest level since the first month of the oil embargo in 1973. On the “final demand” basis adopted as standard 10 years ago, it hit an all-time high earlier this year. Now, both measures have shown a sharp drop, while core PPI has also fallen on either basis, even though it doesn’t include the huge impact of higher oil:

In the US, the American Automobile Association announced that the average price of unleaded gasoline at the pump had dropped below $4 per gallon for the first time since the Ukraine invasion, a relief to motorists and Democrats alike.