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If you have been worried about the inflation bogeyman coming back to get you with a vengeance, the Produce Price Index (PPI) for final demand in January might fit the bill of a scary tale on the headline data. The Bureau of Labor Statistics (BLS) reported that the monthly headline PPI reading was up a hotter-than-expected 0.6%. This blew out the estimate of 0.3% from Bloomberg and the 0.2% expected from Dow Jones (Wall Street Journal).

While the headline was sharply higher, there were some serious exceptions here. For instance, the core PPI, which excludes food and energy, rose by 0.4% rather than the 0.2% consensus estimate from Bloomberg.

The BLS reported that over 60% of January’s advance in the final demand index was attributable to a 1.0% gain in prices for final demand goods. Then when you break out the product demand, over half of January’s increase in prices for final demand goods was attributable to a 12.9% jump in the gasoline index. The indexes for pharmaceutical preparations, iron and steel scrap, home heating oil, residential natural gas and pork also moved higher. The BLS showed that a contrast in food prices was a 7.2% drop for beef and veal.

Another consideration, which is actually more important than the monthly data, is the annualized numbers. These make up the real inflation because prices are generally compared to a year ago. The headline PPI was up 1.6% from January of 2016, and the core PPI was up 1.2% on the annualized reading. The prior reports from December were up 1.6% on both of the annualized reports.

Another portion of this report is a real core PPI that is a relatively new way of evaluating the report: PPI less food, energy and trade services. This sub-core reading was up 0.2% on the monthly reading (versus 0.1% a month earlier) and it was up 1.6% on the annualized basis (versus 1.7% reported a month earlier).

The yield on the 10-year Treasury was last seen at 2.43%, up from 2.40% yesterday and 2.39% a week ago. The 30-year yield was last seen at 3.02%, up from 2.99% yesterday but compared with 3.03% a week ago.