The key inflation target reaches a new record high - once again | MCUTimes

The key inflation target reaches a new record high – once again

Producer price inflation, which measures the prices American producers receive for their goods and services, rose 7.8% during the 12 months ending in July. It was more than economists had expected and marked a new record high since Bureau of Labor Statistics first started calculating the index in November 2010.

The two seemingly conflicting data points are “a mix that will keep inflation concerns alive, although economists will continue to expect a slowdown in monthly price increases until the end of the year,” Economics economists wrote in a research note to clients.

The rise in pandemic inflation has raised concerns that an overheating economy could stop Americans from spending, which would be terrible for recovery. Investors are also worried that higher-than-expected inflation could force it Federal Reserve to change its policy faster than hoped, even though the central bank has so far stuck to the manuscript that higher prices are only temporary.

“Producer price inflation will slow over the next 12 months as supply chain conditions improve and the economy sets in motion its large margin of underutilized production capacity,” PNC senior economist Bill Adams said in comments.

In July alone, producer prices rose by a seasonally adjusted 1%, almost double what analysts had expected. Most of the jump was due to higher prices of services and within these higher margins received by wholesalers and retailers, especially for cars and car parts.

Prices for travel services also rose, including airlines and accommodation, outpatient hospital treatment and machinery wholesale, among others.

But by removing more volatile components, such as food, energy and trade services, inflation still rose sharply in July. In the 12 months ending in July, prices rose 6.1%, the largest increase since the BLS first began calculating this data in August 2014. For the month alone, prices rose 0.9%.

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