Prices paid to U.S. producers for final demand goods and services jumped in August at a rate that exceeded projections and amounted to the largest annual increase on record.
The producer price index (PPI) rose 0.7 percent from the prior month and 8.3 percent from a year ago — a new high for the metric — according to the Department of Labor. In July, prices were 7.8 percent higher than in 2020, a record high increase until now.
The goods that saw the most significant price increases in August were meats — especially poultry which shot up eleven percent — as well as residential natural gas, industrial chemicals, and motor vehicles. The services that generated a third of the overall rise in prices were health, beauty, and optical goods retailing, CNBC reported.
Removing food, as well as energy and trade services — which tend to have more volatile fluctuations — from the equation, the core PPI increased 0.6 percent for the month and 6.7 percent since August of 2020.
Despite the Federal Reserve’s insistence that recent inflationary pressures are transitory, Friday’s data suggests prices on the demand side are continuing to climb.
Rising labor expenses due to shortages, exacerbated by the continuation COVID unemployment benefits, are also believed to be contributing to surging costs for producers. Producers have likely transferred some of these costs to consumers, who have also seen significant price increases this year.
While Federal Reserve officials have predicted a relaxation in inflationary pressures, the updated numbers show they have yet to relent.
Some Republicans have identified the spending increases championed by Democrats since the start of 2021 as the perfect fuel for persistent and potentially runaway inflation.