Wholesale inflation in the United States jumped 11.2 percent last month compared to a year earlier, in another sign that inflationary pressure remains high at all levels of the economy.
The Labor Department said on Wednesday that its 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 biggest 12-month increase in wholesale prices since annual rates were first calculated in 2010, piling pressure on President Joe Biden as inflation emerges as a top concern for voters.
The report showed that the wholesale prices of some consumer goods rose sharply, with fresh vegetables rising by 81.5 percent compared to last year, cereals rising by 40.1 percent, and processed chicken jumping by 28.6 percent.
The latest painful economic news comes just a day after the Consumer Price Index, which measures prices at the retail level, hit 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 the pressure on President Joe Biden.
Shipping containers are seen near Seagirt Marine Terminal, Port of Baltimore, Maryland in this file photo. Retailers will face pressure to raise prices further as wholesale prices rise
Wholesale prices minus volatile foods, energy and business services rose 0.9 percent in March, the biggest advance since a 1 percent increase in January 2021.
The so-called core wholesale inflation was 7 percent for the 12 months ending in March.
The rise in oil prices in the aftermath of the Russian invasion of Ukraine has added pressure on prices throughout the economy.
Margins for fuels and lubricants jumped 22.7 percent in March, which the Labor Department called a “major factor” in the increase in end-order services.
Inflation has become the biggest political threat to Biden and the Democrats in Congress as the crucial midterm elections approach in November. 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 soaring prices — even though inflation was running hot long before the attack in late February.
Although Biden insists his policies are not responsible for the price hike, Republican pundits were quick to point fingers at his administration and Democrats in Congress.
“Prices are skyrocketing, families are struggling, and Biden is lying about who is to blame,” RNC Chair Ronna McDaniel said in a statement on Wednesday.
Under Biden, producer price increases have reached record levels for 12 straight months with no signs of slowing. Come November, Biden and the Democrats will face the reality of their failures.”
The Labor Department said on 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 Consumer Price Index rose 8.5% in March compared to 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 ending in March.
Even before the Russian war drove up prices, robust consumer spending, steady wage increases, and chronic supply shortages sent consumer inflation in the United States to its highest level in four decades.
In addition, housing costs, which make up about a third of the consumer price index, have escalated, a trend that seems unlikely to reverse anytime once landlords try to recoup the losses they took 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 was down 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 retreated from record levels set last month, but are still well above historical averages
A cyclist rides in front of a price board at a San Francisco gas station on April 4
The Russia-Ukraine war, now in its second month, and lockdowns in China to contain a resurgence of COVID-19 infections are seen to further disrupt supply chains, exacerbating shortages of some goods.
The Fed in March raised its benchmark interest rate by 25 basis points, the first increase in more than three years.
The policy meeting minutes published last week appear to set the stage for more large rate hikes to come.
The Fed is also expected to soon start shrinking its asset portfolio, which has been inflated by hundreds of billions in monthly bond purchases over the past several years.
The expected rapid pace of federal interest 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 probability of a recession next year at 40 percent.