Producer prices increased 10% for the US FY ending in February, according to a report from the US Bureau of Labor Statistics, the highest on record.
The inflation rate in Tuesday’s PPI (producer price index) report was up 0.2 percentage points from the prior month and is the highest in the gauge’s 11-yr history.
Tuesday’s news signals more pain to come for American households. The PPI gauges the wholesale prices of goods, which are eventually passed down to consumers.
The news came just after a report for the month of February found CPI (consumer prices) increased by 7.9%, that the fastest annual rate in 40 yrs. The high rate of inflation has damaged Mr. Biden politically and undercut support for his spending proposals.
Tuesday’s reading came in before the Fed’s Federal Open Market Committee ended its 2-day meeting and as expected announced the 1st interest rate increase since 2018.
The Fed undertook unprecedented measures to ease monetary policy after the pandemic began more than 2 yrs ago. Those easy-money measures included slashing its interest rate target to Zero and buying up massive amounts of government bonds.
Now, the Fed is trying to rein in inflation by reversing those policies.
Further complicating matters for the FOMC is the Russia-Ukraine war, which has sent Crude Oil North and Nat Gas prices shooting up to their highest marks in history and adding to the rising inflation.
And there is this: Chairman Powell said today wages are rising too fast enve thought they are not keeping up with inflation
Have a healthy, prosperous weekend, Keep the Faith!