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A Worrying Sign: US Wholesale Inflation Accelerated in January
A Worrying Sign: US Wholesale Inflation Accelerated in January
Sputnik International
On Friday, the US Labor Department reported that its producer price index (PPI)---which is used to track inflation before it reaches consumers---rose 0.3% between December and January (an annual increase of 0.9%) after falling -0.1% from November to December.
2024-02-17T05:04+0000
2024-02-17T05:04+0000
2024-02-17T05:04+0000
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On Friday, the US Labor Department reported that its producer price index (PPI)---which is used to track inflation before it reaches consumers---rose 0.3% between December and January (an annual increase of 0.9%) after falling -0.1% from November to December.The report is poor news for the US Federal Reserve which expected more moderate rates through the year, as they continue to struggle to reach their goal for 2% inflation. Apart from food and energy, core PPI increased by 0.5%, and when also excluding trade services, the core PPI rose by 0.6%, which is the biggest one-month advance since January 2023.The consumer price index (CPI)---which measures what consumers pay when checking out---rose 3.1% in January when compared to a year earlier, but is down from 3.4% in December.While inflation for most goods and services stayed under 10%, some key items saw prices soar for January 2024 when compared to January of last year. Those included: frozen juices and drinks which rose 29% (due to storms and poor weather in Florida and Brazil which affected the production of oranges), uncooked beef steaks were hiked 10.7%, and food from vending machines and mobile venders rose 10.6%Motor vehicle insurance also rose 20.6% compared to the year prior, household item repairs rose 18.2%, admission to sporting events bumped up 13.5%, tax return preparation and other accounting fees rose 11.2%, veterinarian services rose 9.6%, non prescription drugs rose 9.2%, and outpatient hospital services rose 8.3%.Mark Zandi, a chief economist at Moody’s Analytics, said that disappointingly, inflation rose from December to January for basic needs including shelter, food, and electricity. Shelter inflation is up 6% in the last 12 months, and is the largest component of any household’s budget. At the end of January the US even recorded an unprecedented number of unhoused people, as well as the oldest age for the median renter.The report could put pressure on the Federal Reserve to retain their high interest rates for a longer period. Either way, inflation will certainly continue to be a political talking point as the US rounds the corner for their 2024 presidential election. While Biden has been able to hold off a recession following the COVID-19 pandemic, prices are still exceeding what Americans make—a point that Republicans will be sure to put pressure on. Treasury Secretary Janet Yellen will reportedly make appearances in the swing states of Pennsylvania and Michigan this week in an effort to campaign for Biden.
https://sputnikglobe.com/20231107/inflation-gnawing-at-american-401k-savings-expert-says-1114778775.html
https://sputnikglobe.com/20240128/record-number-of-people-in-us-are-homeless-amid-continuing-surge-in-rent-costs---report-1116443723.html
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A Worrying Sign: US Wholesale Inflation Accelerated in January
On paper, the job market appears strong and wages are reportedly climbing, but Americans are still feeling a pull on their wallets as they struggle to afford basic needs such as energy, shelter, and food. US President Joe Biden even admitted last week that “prices are still too high”.
On Friday, the
US Labor Department reported that its producer price index (PPI)---which is used to track inflation before it reaches consumers---rose 0.3% between December and January (an annual increase of 0.9%) after falling -0.1% from November to December.
The report is poor news for the US Federal Reserve which expected more moderate rates through the year, as they continue to struggle to reach their goal for 2% inflation. Apart from food and energy, core PPI increased by 0.5%, and when also excluding trade services, the core PPI rose by 0.6%, which is the biggest one-month advance since January 2023.
The consumer price index (CPI)---which measures what consumers pay when checking out---rose 3.1% in January when compared to a year earlier, but is down from 3.4% in December.
“Inflation is back, not in a big way, but it is also true that it is not going away and could yet wreak havoc on the broader economy where higher factory prices increase inflation at the consumer level,” wrote Chris Rupkey, an economist for FwdBonds, on Friday.
7 November 2023, 12:26 GMT
While
inflation for most goods and services stayed under 10%, some key items saw prices soar for January 2024 when compared to January of last year. Those included: frozen juices and drinks which rose 29% (due to storms and poor weather in Florida and Brazil which affected the production of oranges), uncooked beef steaks were hiked 10.7%, and food from vending machines and mobile venders rose 10.6%
Motor vehicle insurance also rose 20.6% compared to the year prior, household item repairs rose 18.2%, admission to sporting events bumped up 13.5%, tax return preparation and other accounting fees rose 11.2%, veterinarian services rose 9.6%, non prescription drugs rose 9.2%, and outpatient hospital services rose 8.3%.
Mark Zandi, a chief economist at Moody’s Analytics, said that disappointingly, inflation rose from December to January for basic needs including shelter, food, and electricity. Shelter inflation is up 6% in the last 12 months, and is the largest component of any household’s budget. At the end of January the US even recorded an
unprecedented number of unhoused people, as well as the oldest age for the median renter.
“You get zigs and zags in all these data, and this was just a zag,” Zandi explained. “The bottom line: Inflation continues to moderate. It’s still uncomfortably high — though ... moving in the right direction.”
The report could put pressure on the Federal Reserve to retain their high interest rates for a longer period. Either way, inflation will certainly continue to be a political talking point as the US rounds the corner for their 2024 presidential election.
“Prices are not going up as quickly, but wages still haven’t caught up to the inflation we’ve seen over the last couple of years,” said EJ Antoni, a Heritage Foundation public finance economist. “That’s a big reason why people are so down on this economy and will continue to be so until that changes.”
While Biden has been able to hold off a recession following the COVID-19 pandemic, prices are still exceeding what Americans make—a point that Republicans will be sure to put pressure on. Treasury Secretary Janet Yellen will
reportedly make appearances in the swing states of Pennsylvania and Michigan this week in an effort to campaign for Biden.
