Wholesale inflation in the US rose 11.2 percent last month from a year earlier, which is another sign that inflationary pressures remain high at all levels of the economy.
The Ministry of Labor said on Wednesday that its producer price index – which follows inflation before hitting consumers – jumped 1.4 per cent in March from the previous month and 11.2 per cent from a year ago.
This is the largest 12-month increase in wholesale prices since annual prices were first calculated in 2010, increasing pressure on President Joe Biden as inflation turns out to be a top voter concern.
The report showed that wholesale prices for some consumer goods rose sharply, with fresh vegetables rising 81.5 per cent on a year ago, cereals rising 40.1 per cent and processed chickens rising 28.6 per cent.
The latest painful economic news comes just 24 hours after the consumer price index, which measures prices at the retail level, hit the highest level in 41 years at 8.5 percent.
The producer price index – which follows inflation before it hits consumers – rose 1.4 per cent in March from the previous month and 11.2 per cent from a year ago
This is the largest 12-month increase in wholesale prices since annual prices were first calculated in 2010, increasing pressure on President Joe Biden
Shipping containers are seen near Seagirt Marine Terminal, Port of Baltimore, Maryland on a file image. Retailers will face pressure to raise prices further as wholesale prices rise
Wholesale prices minus volatile food, energy and trade services rose 0.9 percent in March, the biggest biggest progress since a 1 percent increase in January 2021.
The so-called core wholesale inflation was 7 percent for the 12 months ending in March.
Rising oil prices following Russia’s invasion of Ukraine have put pressure on prices throughout the economy.
Margins for fuels and lubricants rose 22.7 percent in March, which the Department of Labor called an ‘important factor’ in the rise in final demand for services.
Inflation has become a top-political threat to Biden and the Democratic Democrats as the crucial midterm elections in November approach. Small business owners are now saying in surveys that this is also their primary financial concern.
Biden has responded by blaming Russia’s invasion of Ukraine for higher prices – even though inflation was running hot long before the attack in late February.
Although Biden insists his policy is not to blame for rising prices, Republican critics have been quick to point the finger at his administration and Democrats in Congress.
“Prices are skyrocketing, families are fighting, and Biden is lying about who’s to blame,” Republican National Committee chair Ronna McDaniel said in a statement Wednesday.
‘During Biden, producer price increases have hit record highs for 12 consecutive months with no signs of slowing. In November, Biden and the Democrats will face the reality of their failures, “she added.
The Ministry of Labor said on Tuesday that the consumer price index – which measures retail inflation – rose 1.2 percent in March from the previous month, to an increase of 8.5 percent from a year ago.
The consumer price index rose 8.5% in March from a year ago, the highest in 41 years
It was the largest annual gain since December 1981. Excluding volatile foods and energy, prices rose 6.5 percent in the 12 months ending March.
Even before Russia’s war spurred further price increases, robust consumer spending, constant wage increases and chronic supply shortages had sent US consumer inflation to its highest level in four decades.
In addition, housing costs, which account for about a third of the consumer price index, have escalated, a trend that seems unlikely to reverse anytime soon as landlords try to recover losses incurred during the pandemic.
Gas prices rose in March in response to Russia’s invasion, which contributed significantly to last month’s inflation rate.
According to the AAA, the average price of a gallon of gasoline on Tuesday – $ 4.10 – has risen 43 percent from a year ago, although it has fallen from record highs in the last few weeks.
Russia’s invasion of Ukraine has increased the prices of raw materials such as crude oil, wheat and sunflower oil.
Gas prices have fallen from the record highs set last month, but remain well above historical averages
A cyclist drives past a price tag at a gas station in San Francisco on April 4th
The Russia-Ukraine war, now in its second month, and shutdowns in China to curb a resurgence of COVID-19 infections are seen to further disrupt supply chains and exacerbate shortages of some goods.
In March, the Federal Reserve raised its benchmark rate by 25 basis points, the first increase in more than three years.
The minutes of the political meeting, which was published last week, seemed to form the basis for further large interest rate increases along the way.
The Fed is also expected to soon begin trimming its asset portfolio, which has risen through hundreds of billions in monthly bond purchases over recent years.
The expected rapid pace of Fed rate hikes will make loans significantly more expensive for consumers and businesses.
Many economists say they are concerned that the Fed has waited too long to start raising interest rates and may end up acting so aggressively that it triggers a recession.
Economists polled by Reuters now see the probability of a recession next year of 40 percent.