This note focuses on the detailed information we can get from the Producer Prices data, and how it leads and gives valuable insights into turning points for Core CPI.
The supply chains are breaking. I covered this in my prior note: The Breaking Point. In that note, I decomposed the CPI Index into Iran Supply Chain affected categories to monitor the supply chain stress.
This note compliments that note, and shows how producer prices go through various stages before hitting final demand. Understanding this process helps understand how and when we should see impacts on Core CPI as well as its turning points.
I recommend reading the Breaking Point note before jumping into this one.