A new measure of America’s sputtering economy offered little hope that inflation will ease any time soon.
The producer price index, which measures inflation before it reaches consumers, rose 11.2 percent in March compared with March 2021, the Labor Department announced on Wednesday.
This is the largest increase since the 12-month data measure was introduced in November 2010 and exceeded even the pessimistic expectations of economists surveyed by Reuters, who had predicted a 10.6 percent year-over-year increase.
The 1.4 percent increase from February to March was also the highest on record and surpassed the 1.1 percent increase forecast by economists.
The PPI numbers follow Tuesday’s announcement of an 8.5 percent increase in the consumer price index in March — the largest since December 1981.
In its reporting on the measure of prices paid by wholesalers, CNBC noted that it could mean inflation will be hitting consumers for some time.
“PPI is considered a forward-looking inflation measure as it tracks prices in the pipeline for goods and services that eventually reach consumers,” the outlet said.
“The severe imbalance between robust demand and handicapped supply will persist throughout Q2, keeping producer price inflation sticky and elevated until price pressures start to decelerate in the latter part of 2022,” said Mahir Rasheed, U.S. economist at Oxford Economics.
“With a new wave of lockdowns in China and the war in Ukraine raging on, however, risks to the inflation outlook remain firmly to the upside, reaffirming our view that the Fed must proceed with a faster pace of policy normalization in the months ahead,” he said.
Although some economists have been saying they think the March numbers are a peak for inflation, others said they have heard that song before.
“We have been at this juncture before where subtle shifts within the data make it appear that the level of inflation has reached its peak for the cycle only to keep marching higher,” Charlie Ripley, senior investment strategist for Allianz Investment Management, wrote in a note to clients, according to Politico.
“Going forward, the greater concern is really around how entrenched inflation has become as Americans continue to worry about rising prices,” Ripley said.
Last year, President Joe Biden’s administration said inflation was transitory. This year, the White House has blamed Russia’s invasion of Ukraine.
In an editorial on Tuesday, The Wall Street Journal took issue with the Biden administration’s spin on inflation.
“White House aides were out in force on Monday warning that Tuesday’s inflation report would be ugly and blaming it on Vladimir Putin. No doubt that beats blaming your own policies. But inflation didn’t wait to appear until the Ukraine invasion, and by now it will be hard to reduce,” the editorial said.
Michigan resident Lisa Palmer said Washington did not do its job, according to NPR.
“I don’t blame any one person,” she said. “But yes, I blame the White House and Congress. That is their job to make America work if it’s not working. It’s so broken now … we’re just floundering.”
Walt Hickok of Howell, Michigan, is not buying the Biden line.
“I don’t really attribute it to the war, because it started before the war,” he said. Russia invaded Ukraine in February.
Biden is blaming inflation on Putin’s invasion of Ukraine. Did Putin invade Ukraine at the beginning of 2021? My memory is a little foggy pic.twitter.com/V5gtA9ke3G
— Dr. Matt Walsh, Women’s Studies Scholar (@MattWalshBlog) April 12, 2022
“I think all the giving of money to everybody — the stimulus checks — it has not helped the country in my opinion, because now you find signs everywhere saying we need people to work,” Hickok said.
Republican Rep. David Schweikert of Arizona also pointed to rampant federal spending as the cause, saying warnings of what has happened since then were ignored, according to The Hill.
“Even some of the leading Democratic economists a year ago were begging them, ‘Do not throw more kerosene and matches onto the kindling that the Fed had left us,'” Schweikert said.
Policies to fix the mess require “a lot of our Democratic colleagues to admit that their fiscal policy from last year was the match that set off the kindling,” he said.
This article appeared originally on The Western Journal.
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