Wholesale inflation in the US jumped 11.2 percent last month from a year earlier, in another sign that inflationary pressure remains high across the economy.
The Labor Department said on Wednesday that the Producer Price Index – which measures inflation before it hits consumers – jumped 1.4 percent in March from the previous month and 11.2 percent from a year ago.
It’s the largest 12-month increase in wholesale prices since annual rates were first calculated in 2010, adding pressure on President Joe Biden with inflation emerging as a major concern to voters.
The report showed wholesale prices of some consumer goods rose sharply, with fresh vegetables up 81.5 percent from a year ago, grains up 40.1 percent, and processed chicken jumping 28.6 percent.
The latest dire economic news comes just a day after the Consumer Price Index, which measures prices at the retail level, reached a 41-year high of 8.5 percent.
The Producer Price Index – which tracks inflation before it hits consumers – jumped 1.4 percent in March from the previous month and 11.2 percent from a year ago.
It’s the biggest 12-month increase in wholesale prices since annual rates were first calculated in 2010, adding to pressure on President Joe Biden.
Shipping containers are seen near the Seagirt Naval Terminal, Port of Baltimore, Maryland in a file photo. Retailers will face pressure to raise prices further as wholesale prices rise
Wholesale prices minus volatile foods, energy and commercial services rose 0.9% in March, the biggest advance since a 1% increase in January 2021.
So-called core wholesale inflation was 7 percent for the 12 months ending in March.
Rising oil prices in the wake of the Russian invasion of Ukraine put further pressure on prices throughout the economy.
Margins for fuels and lubricants jumped 22.7 percent in March, which the Labor Department described as a “key factor” in increasing end-demand services.
Inflation has become the biggest political threat to Biden and Democrats in Congress as the crucial midterm elections in November approach. Small business owners now say in surveys that this is their primary economic concern as well.
Biden responded by blaming the Russian invasion of Ukraine for high prices — even though inflation was hot long before the attack in late February.
Although Biden insists his policies are not to blame for the price hikes, Republican critics were quick to point the finger at his administration and Democrats in Congress.
“Prices are skyrocketing, families are struggling, and Biden is lying about who is to blame,” Republican National Committee Chair Rona McDaniel said in a statement on Wednesday.
Under Biden, producer price increases have reached record highs for 12 straight months with no signs of slowing down. As November comes, Biden and Democrats will face the reality of their failures.
The Labor Department said Tuesday that the Consumer Price Index – which measures retail inflation – rose 1.2 percent in March from the previous month, up 8.5 percent from a year ago.
The CPI rose 8.5% in March from a year ago, the highest level in 41 years
This is the largest annual gain since December 1981. Excluding volatile food and energy prices, prices rose 6.5 percent in the twelve months to March.
Even before the Russian war pushed up prices, robust consumer spending, steady wage increases and chronic supply shortages drove US consumer inflation to its highest level in four decades.
In addition, housing costs, which make up about a third of the consumer price index, have surged, a trend that seems unlikely to reverse at any time once realtors try to make up for the losses they incurred during the pandemic.
Gas prices rose in March in response to the Russian invasion, which contributed significantly to the inflation rate last month.
According to AAA, the average price of a gallon of gasoline on Tuesday — $4.10 — was up 43 percent from a year ago, although it has fallen from record levels in the past two weeks.
The Russian invasion of Ukraine raised the prices of basic commodities such as crude oil, wheat, and sunflower oil.
Gas prices have fallen from record levels last month, but are still well above historical averages
A cyclist rides in front of a price board at a gas station in San Francisco on April 4
The Russo-Ukrainian war, now in its second month, and lockdowns in China to contain the resurgence of COVID-19 infections, are seen as further disrupting supply chains, exacerbating shortages of some goods.
The Federal Reserve in March raised its benchmark interest rate by 25 basis points, the first increase in more than three years.
The minutes of the policy meeting published last week appear to have paved the way for more significant rate hikes in the future.
The Fed is also expected to soon start shrinking its asset portfolio, which has ballooned through monthly bond purchases in the hundreds of billions over the past several years.
The expected rapid pace of Fed rate increases will make loans sharply more expensive for consumers and businesses.
Many economists say they worry that the Fed has waited too long to start raising interest rates, and may end up acting so aggressively that it triggers a recession.
Economists polled by Reuters now put the chance of a recession next year at 40 percent.