Another key inflation indicator flashed a warning signal in May: Which Producer prices rose by a record amount last month.

Which Economy is fully reopened and rising demand along with supply chain issues and material shortages are driving up prices.

This trend, which has already continued throughout the year, continued in May. Between May 2020 and May 2021, prices increased by 6.6%. This is the largest increase since Bureau of Labor Statistics began collecting this data in November 2010.

The price index has risen steadily since September last year. Prices rose by 0.8% seasonally adjusted in May alone, slightly more than in April. The producer price index is another measure of inflation, which examines the average change in priceswhich the American producers receive for their goods and services. More than half of the increase in May was due to Price increases for goods attributable.

Prices for non-ferrous metals, such as aluminum, recorded the largest increase in the price of goods, while car dealers ‘ margins contributed the largest increase in services. The US is not the only nation with this problem: Last week reported China the highest producer price inflation in almost 13 years.

Producers worldwide struggle with higher input costs and bottlenecks. The data show that in the 12 months to May, American factories increased prices for processed goods sold into the supply chain of other manufacturers by almost 22 % , the largest increase since 1975. This was mainly due to the high wood prices.

“While the data of the [Verbraucherpreisinflation] already confirmed from last week, final prices are rising at their fastest pace in more than a decade“ but the PPI showed no let-down in sight as intermediate costs tighten further back in the pipeline – – Wells Fargo economist Sarah House

But not only the material, but also the transport costs increase. Next on the economic agenda is the monetary policy update from the Federal Reserve on Wednesday.
So far, the Central Bank has stated that it despite rising inflation, there is no cause for concern. But with each new data point growing pressure on the Fedto defend this position.

Sharp rise in inflation in the US and Europe

With the economy rapidly gaining momentum in the wake of the Covid pandemic, Americans expect inflation to rise in the coming months. Overall, the inflation rate is expected to be up to 4% in a year. This is a new high for inflation expectations.

At the same time, consumers surveyed by the New York Fed also expected rising household income and expenditure, especially for households with an annual income of more than $ 100,000.

According to a separate report from the Ministry of Labor in May, the consumer price index rose by 5% year-on-year %, the fastest pace since shortly before the 2008-09 financial crisis.

“Workers could begin to demand higher wages and accelerate their large purchases, which could prompt companies to raise prices and create the real phenomenon of inflation itself – – Analyst Sarah Foster.

Last updated on June 16, 2021

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