A measure of wholesale inflation that tracks prices before they reach consumers surged to its fastest annual rate since April 2023, according to new data released Tuesday by the Bureau of Labor Statistics (BLS).
The producer price index (PPI) rose 0.5% in April, totaling a 2.2% annual rate, far higher than estimates that the index would rise 0.3% in the month, according to the BLS. The report adds to fears that inflation is once again surging following the consumer price index jumping to 3.5% in March, up from 3.2% in February and far from the Federal Reserve’s 2% target. (RELATED: US Job Growth Projected To Stall In Coming Year In Another Sign Of Stagflation)
Growth in the price of demand services led the increase, rising 0.6% for the month while the price of final demand goods rose 0.4%, according to the BLS. Core PPI, which excludes the volatile categories of food and energy, also had its biggest increase since April 2023, rising 0.4% for the month and 3.4% for the year.
Higher inflation could push back the possibility of a rate cut from the Federal Reserve even further, with a majority of market watchers not predicting a cut until the Fed’s September meeting, according to CME Group’s FedWatch Tool. The Fed has set its federal funds rate to a range of 5.25% and 5.50%, the highest level in 23 years, in response to persistently high inflation.
August came early to DC today: it’s hot and sticky inflation in producer prices w/ PPI up 0.5% M/M for Apr and 2.2% Y/Y – that’s the fastest annual increase since Apr ’23…
…inflation is NOT dead; it’s getting worse: pic.twitter.com/QXsIjmWfNO— E.J. Antoni, Ph.D. (@RealEJAntoni) May 14, 2024
Around 80% of American voters listed inflation as one of their top three financial stressors in a recent poll conducted by the Financial Times and the University of Michigan’s Ross School of Business, meaning persistent inflation could severely affect President Joe Biden’s reelection chances. Nearly half of the voters surveyed believed that Biden’s policies had hurt the economy.
Economic growth slowed in the first quarter of 2024 to just 1.6%. Slow growth coupled with high inflation has spawned fears that the economy is entering a period of stagflation similar to the one that wreaked havoc on American consumers during the 1970’s and 1980’s.
Biden has sought to blame recent elevated inflation on corporate greed, alleging that companies are capitalizing on the current economy by rapidly marking up prices. The Federal Reserve Bank of San Francisco recently released a report disproving Biden’s claims by showing that corporate markups over the last few years have tracked similarly to other periods of economic recovery when inflation was not as elevated.
The CPI for inflation in April is expected to be released Wednesday, with analysts projecting the year-over-year rate to tick down slightly to 3.4%, according to Market Insider.
The White House did not immediately respond to a request to comment from the Daily Caller News Foundation.
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