In short, it’s not a good sign for those expecting a below-consensus CPI beat.

In short, it’s not a good sign for those expecting a below-consensus CPI beat.

Although headline PPI is coming down, the month-over-month (MoM) growth came in higher than expected at 0.4% (consensus: 0.2%) and the headline annual change came in at 8.5%.

PPI has less of an impact on immediate market moves compared to the CPI as it doesn’t account for inflationary costs being passed on to the end consumer.

Still, it’s an inflationary measure that gauges if businesses are facing accelerated prices and tends to move in the same direction as CPI.

CPI consensus is 0.2% MoM so an overshoot of even 10 basis points could send the market into another significant downwards move, killing any Federal Reserve pivot hope left.

That said, 17 of the last 19 nowcasting forecast reports were actually under the CPI reading.

That said, 17 of the last 19 nowcasting forecast reports were actually under the CPI reading.

Recently this tool has been closer than most consensus forecasts but consistently underestimates the actual CPI data.

When the more conservative CPI forecasters are predicting a consensus beat, tread cautiously.

When the more conservative CPI forecasters are predicting a consensus beat, tread cautiously.