The double digit signals that rising inflation will continue to eat into consumer budgets for months.
Producer prices in the United States increased 11% year over year in April, indicating that high inflation will continue to be a hardship for consumers and businesses in the months ahead.
The producer price index, which monitors inflation before it reaches consumers, rose 0.5 percent in April from March, according to the Labor Department. However, this is a decrease from the previous month, when it increased by 1.6 percent. The survey showed some evidence of price rises slowing, but they remain brutally high.
The year-over-year increase in April was down from 11.5 percent in March, marking the first time the annual figure has fallen since December 2020. And the 0.5 percent monthly gain was the weakest in seven months.
Despite this, prices continue to rise at an unprecedented rate. Food expenses increased by 1.5 percent in April compared to March, while shipping and storage costs increased by 3.6 percent. The cost of a new car increased by 0.8%.
Producer pricing data captures inflation at an early point in the manufacturing process and can occasionally predict where consumer prices will go. It also factors into the personal consumption expenditures price index, which is the Federal Reserve’s favored measure of inflation.
The results were announced just one day after the government issued consumer price data for April, which showed that inflation increased by 8.3% from a year ago. This is down somewhat from the four-decade high of 8.5 percent in March. Inflation climbed 0.3 percent month over month in April, the smallest gain in eight months. Nonetheless, the consumer price data contained numerous indicators suggesting inflation will continue persistently high for the rest of this year and into 2023. Rents increased more quickly because many apartment buildings increased monthly fees for new occupants. The most significant increase in airline ticket prices since 1963. Food prices also continued to grow rapidly.
The Federal Reserve ramped up its war against price inflation last week, raising its benchmark short-term interest rate by a half-point to a range of 0.75 percent to 1%. This is more than double the average quarter-point gain.
Fed Chair Jerome Powell also said that the Fed will likely raise rates by half a percentage point in June and July. Several Fed officials have stated that they want the benchmark rate to reach around 2.5 percent by the end of the year, which would be the fastest rate hike in 33 years.
This month’s financial markets have been seriously shaken by the prospect of increasing interest rates and the possibility that they may push the country into recession.
