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Tipsheet

Another Disastrous Inflation Report Shows Prices Set to Keep Spiking

AP Photo/John Minchillo

Producer prices jumped 9.7 percent in the last twelve months and increased one percent in January according to the latest release from the Bureau of Labor Statistics as inflation continues to run red-hot on President Biden's watch and "blew past investor expectations" according to MarketWatch. "Oof," indeed.

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The Producer Price Index, a gauge on prices paid for the goods used to make final products — such as metals and lumber for frames, grains for cereal, and even the glue used to package a product or the foil safety seal on jars of peanut butter — is a measure of inflation upstream from American shoppers. And that means an increase of nearly ten percent in what it costs manufacturers and producers to get the goods they need to fulfill consumer demand means Americans are sure to see prices continue to spike. 

January's one percent increase doubles the forecast of 0.5 percent month-over-month, and the 9.7 percent year-over-year number beat the 9.1 percent forecast as inflation growth outpaces even what experts expected.

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The latest report from the Bureau of Labor Statistics follows last week's 40-year high for consumer prices that grew at the fastest year-over-year rate since 1982. The spike in producer prices that doubled economists' estimations also undermines the left's narrative that rising prices are caused solely by what they call "greedy companies." 

That is, if it costs a company nearly ten percent more to acquire the items necessary to produce something, those costs will naturally be passed on to the consumer or else a business won't be able to turn a profit and buy the next round of more-expensive goods. And while consumer prices are rising at a slightly lower rate — 7.5 percent in January, two percent lower than producer prices' year-over-year increase — consumers' position downstream from producers means the end buyer is likely to see prices continue to increase on the goods and services they need. 

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For context on how hot inflation is running, the average for year-over-year inflation before the pandemic or Biden took office was 1.5 percent. Now, consumers are paying 7.5 percent more than they were last year and producers are paying 9.7 percent more to make their products.

After initially claiming inflation was a temporary issue, the Biden administration has all but abandoned that line, but their repeatedly failed attempts to pass more spending bills, such as Build Back Better, suggests the White House is not keen to address or alleviate inflation's pressure on Americans' budgets. 

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