The economy is fully reopening and soaring demand, along with supply chain issues and material shortages, are pushing up prices. This trend, which continued throughout the year, continued in May.
Between May 2020 and May 2021, prices rose 6.6% – the biggest jump since the Bureau of Labor Statistics began collecting this data in November 2010. The price index has risen steadily since September by Last year.
Excluding the more volatile prices for food, energy and commercial services, prices rose 5.3% in the 12 months ended May. It was also the biggest jump on record, although this data series began in August 2014.
In May alone, prices rose 0.8% on a seasonally adjusted basis, a slightly faster pace than in April.
Prices for non-ferrous metals, such as aluminum, recorded the biggest increase in goods prices, while auto retailer margins contributed the biggest jump for services.
The United States is not the only country to have this problem: last week, China recorded the highest level of producer price inflation in almost 13 years.
Producers are grappling with higher input costs as well as shortages around the world. Data shows that US factories saw prices for processed products sold through other manufacturers’ supply chains jump nearly 22% in the 12 months ending in May, the biggest increase since 1975. That was. mainly due to the high prices of wood.
The price index for unprocessed products sold in the supply chain jumped nearly 58%, the biggest jump since 1973.
“While last week [consumer price inflation] data has already confirmed that end prices are increasing at the fastest rate in over a decade, the PPI has shown no easing in sight as intermediate costs continue to climb further up the pipeline, ”Sarah House wrote , Wells Fargo economist, in a note to clients.
But it’s not just the materials: transport costs are also increasing.
Next on the economic agenda is the Federal Reserve’s monetary policy update on Wednesday.
So far, the central bank has said that even if inflation rises, there is no cause for concern. It makes sense to see some woes after turning the economy off and on again. But with each new data point, the pressure on the Fed increases to defend this position.