Producer Price Inflation Accelerates At Record-Breaking Pace
September 13, 2021
The prices that producers paid for goods and services surged in August at the fastest annual pace since at least 2010, according to the Labor Department.
The producer price index (PPI) rose by 0.7% for the month. This is higher than the 0.6% increase economists at Dow Jones had anticipated, but a decline from July’s 1% month-to-month increase.
On a year-over-year basis, however, the index climbed 8.3%, the largest annual increase since records began being kept in 2010. That follows July’s 7.8% annual increase, which also set a record.
Core PPI, which leaves out volatile components like food and energy, was up 0.3% for the month, well below expectations of 0.5%. Annually, core PPI was up 6.3%, the largest year-over-year increase since August 2014.
The Federal Reserve maintains its stance that the inflationary pressure is being driven by high demand as the nation emerges from the pandemic, as well as ongoing supply chain issues and shortages caused by pandemic-related disruptions. Though the Fed expects inflation to ease throughout the rest of the year, it has remained stubbornly persistent, and this data suggest the trend is likely to continue.