Wholesale price inflation in US highest since 2010

The United States Labour Department on Thursday said that wholesale price inflation in April surged by 6.2% as compared to last year, the highest such rise on record.

The data followed Wednesday’s report, which showed a spike of 4.2% in the
consumer prices over a year. It adds a lot of pressure on President Joe Biden’s plan to
help the world’s largest economy get back up from the COVID-19 pandemic without
further increase in prices.

Analyst point out the inflation was caused from price collapses seen in
the early weeks of the pandemic, as well as the economy’s uneven reopening.

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The annual increase in the Producer Price Index (PPI) is the highest
since the current form of the index was launched in November 2010, and compares
to a 1.5 % drop reported in April 2020.

Excluding volatile food and energy products, PPI rose 4.2 % over the
latest 12 months, also the largest on record dating back to August 2014. A year
ago, it dipped 0.1 %.

Mahir Rasheed of Oxford Economics noted that supply chain bottlenecks
are contributing to rising inflation, but the effect should not last.

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“We expect upward price pressures to persist in the near term
before supply constraints are resolved and base effects fade,” Rasheed
said, agreeing with the Federal Reserve’s view that “much of the
acceleration in inflation will be transitory… (and) this isn’t the start of
an upward inflationary spiral.”

PPI rose 0.6 % compared to March, double the consensus forecast, the
report said, noting that a third of the increase was from services. A year
earlier, the monthly index plunged 1.1 %.

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And while energy prices have been moving higher, the report said
wholesale gasoline prices actually fell 3.4 % in the month.