On Friday, it confirmed the rise in inflation after the U.S. Department of Labor said its producer price index (PPI), which measures the prices companies get for the goods and services they sell, jumped 8, 3 percent in August a year earlier, the largest advance since data was first measured in November 2010.
If U.S. consumers feel that their dollar isn’t stretching as much as it used to, there’s a good reason for it.
Because it is not.
On Friday, it confirmed the rise in inflation after the U.S. Department of Labor said its producer price index (PPI), which measures the prices companies get for the goods and services they sell, jumped 8, 3% in August a year earlier.
This is the largest advance since the data were first measured in November 2010.
The August PPI rose 0.7 per cent over the previous month, when producer prices rose 1 per cent.
Inflation has become a hallmark of COVID-19’s global and U.S. economic recoveries as companies increase their mass operations, causing bottlenecks in the supply of raw materials. Labor shortages are also creating headaches for American companies, many of which have had to raise wages or offer signing bonuses to attract workers.
In July, 10.9 million record jobs were recorded in the US.
Prices for final demand services rose 0.7% last month, marking the eighth consecutive advance.
Eliminate food and energy, which tend to be more volatile, and so-called “basic” PPI rose 0.3 percent in August after rising 0.9 percent in July.
During the year, basic production prices rose by 6.3%, the largest advance since the data were calculated in 2014.
When prices rise for companies, these costs are often passed on to consumers, whose spending accounts for about two-thirds of U.S. economic growth.
While a little inflation is good for an economy because it encourages consumers to buy goods and services now, instead of sitting in the portfolio waiting for prices to go down, excessive inflation can be profoundly destructive if it causes a spiraling vice price rise.
The big fear is that if inflation goes out of control, it could push the U.S. Federal Reserve to sharply raise interest rates and possibly derail the economic recovery.
But Federal Reserve Chairman Jerome Powell has repeatedly said he and his fellow decision-makers believe the current wave of higher prices is a temporary consequence of supply bottlenecks and that inflation will end. moderating.
Inflation is also tougher in lower-income households, as it eats a larger portion of their income, especially for commodities such as food and gasoline.
The economic upturn reached a strong pace this summer, as COVID-19 infections related to the Delta variant of the highly contagious coronavirus increased in some parts of the country.
On Wednesday, the Federal Reserve said economic activity in the U.S. had “shrunk” in July and August. Last month, the economy added 235,000 disproportionate jobs – the slowest pace of job creation since January and a dramatic slowdown from the previous month.