Producer prices rose 0.6 percent in October
Prices charged by producers rose at a slightly higher rate in October, according to data released Tuesday by the Labor Department.
The producer price index (PPI) for final demand, which tracks prices charged for goods and services that aren’t parts of other products, rose 0.6 percent in October and 0.4 percent without food and energy goods and services, largely in line with expectations. Prices for final demand goods and services have jumped 8.6 percent in the year leading into October, staying even with a record high set in September.
Producers, warehousers, shipping companies and retailers have struggled to meet a rush of demand unleashed by widespread COVID-19 vaccines and steady federal stimulus. While consumer spending has snapped back to pre-pandemic levels, much of it has flooded to the goods sector, which is struggling to rehire and expand production after the emergence of the delta variant of the novel coronavirus.
The result has been higher prices and longer wait times for retailers and wholesalers when they purchase goods in high demand and limited supply.
More than 60 percent of the total October increase in the PPI for final demand was driven by a 1.2 percent jump in prices charged for final demand goods, the Labor Department said.
One-third of the total increase in final demand goods prices came from a 6.7 percent monthly increase in gasoline prices, which have risen steadily through the second half of 2021 across the globe.
Even so, the PPI report showed prices for some high-demand goods fading after earlier surges.
Prices charged for food products fell 0.1 percent in October after rising 3 percent in August and 2 percent in September. Beef and veal producers also charged 10.3 percent less last month.
The release of the October PPI comes a day before the Labor Department is scheduled to reveal consumer inflation figures for last month. Economists and policymakers pay closer attention to consumer prices, which have also risen steadily as the economy rebounded amid pandemic-related constraints.
Rising prices, particularly for food and energy, have been a tough blow for households with tight budgets. The persistence of price increases for longer than many economists expected has also raised some concerns about when they will begin to ease, and pressure on the Federal Reserve to step in sooner.
Even so, most of the steady pressure on prices appears to be driven by COVID-related shutdowns, consumer behavior changes and the challenges of fully reopening the global economy. A broad range of economists also argue that a temporary burst of inflation is a worthy tradeoff for a much quicker than expected recovery from the onset of the pandemic.
The economy added 531,000 jobs in October and the unemployment rate dropped to 4.6 percent, according to the Labor Department, the lowest level since the start of the pandemic.
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