Well, fair to say that the self-inflicted wounds are piling up.

As much as we've already been paying the price, like literally, in the form of tariff inflation

that the administration insists doesn't exist, and in the creeping cost of core goods and services

like food and health care and electricity, we're about to pay a whole lot more.

When we think about inflation, there are typically three major indices that economists or the markets

look at to kind of judge where we are in a particular business cycle. So you've got CPI, which is like the big

headline figure that we usually talk about, at least in the financial media. Then you've got

PCE. PCE is that core inflation measure that the Fed looks at and what they build their policy around.

But then there's something called PPI. PPI stands for the producer price index, and the reason

that people are talking about it more often these days is that coming into the beginning of this

year, it came in extra hot. So PPI is essentially the upstream inflation gauge. It measures what

businesses pay to produce goods and services before they reach the checkout line or the

shopping card or the final bill. So think of it as inflation that's in the pipeline. It doesn't

hit you at the register today. It hits you two to four months down the road after the wholesaler

marks things up and the distributors take their cut and then the retailer slaps on a profit.

One way to think about it is that the PPI is the canary. CPI, which measures it at the other end,

the canary is already dead. So we have some pretty big news on this, which is why I wanted to come in

with this episode today. This morning, the PPI data just dropped,

and it is a doozy. So headline producer prices rose 0.7% in a single month. The estimate was 0.3.

So it's more than double expectations. On an annual basis, the headline rate jumped from 2.9% to 3.4%. That's the highest

in a year, and way above forecasts that it would hold flat. Now, core PPI, which strips out food

and energy, came in at 3.9% year over a year. Goods surged 1.1% in one month.

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