On Friday, there was more confirmation of rising inflation after the US Department of Labor said that its producer price index (PPI) – which measures companies’ prices for the goods and services they sell – rose by 8.3 percent in August. years before, the largest since the data were first measured in November 2010.
If consumers in the United States feel that their dollar is not going as far as before, there is a good reason for it.
Because it’s not.
Friday brought more confirmation of rising inflation after the U.S. Department of Labor said its producer price index (PPI) – which measures prices that businesses sell for the goods and services they sell – rose 8.3 percent year-on-year in August before.
This is the largest advance since the data were first measured in November 2010.
August’s PPI rose 0.7 percent from the previous month, when producer prices rose 1 percent.
Inflation has become a feature of the US and global economic recovery of COVID-19 as businesses massively increase their operations, causing bottlenecks in the supply of raw materials. Labor shortages also cause headaches for American businesses, many of which have had to increase their salaries or sign bonuses to attract workers.
Seen July a record 10.9 million jobs in the USA.
Prices for services for final demand rose by 0.7 per cent last month, which was the eighth consecutive advance.
Remove food and energy, which are more volatile, and the so-called “core” PPI rose 0.3 percent in August after rising 0.9 percent in July.
During the year, core producer prices rose by 6.3 percent – the largest advance since data were first calculated in 2014.
As business prices rise, costs are often passed on to consumers, whose spending accounts for about two-thirds of U.S. economic growth.
While a little inflation is a good thing for an economy, as it encourages consumers to buy goods and services now, rather than sitting on their wallets in the expectation of falling prices, too much inflation can be deeply destructive if it can cause an evil price. spiral.
The big fear is that if inflation gets out of control, it could prompt the US Federal Reserve to suddenly raise interest rates and possibly derail economic recovery.
But Federal Reserve Chairman Jerome Powell has repeatedly said he and his fellow policymakers believe the current wave of higher prices is a temporary consequence of supply bottlenecks and that inflation will eventually moderate.
Inflation is also more difficult for lower-income households because it takes up a larger share of their income, especially for necessities such as food and petrol.
The economic downturn has gained momentum this summer as COVID-19 infections related to the highly contagious Delta variant of the coronavirus have increased in parts of the country.
The Federal Reserve said on Wednesday that economic activity in the US had ‘slowed’ in July and August. Last month, the economy added a meager 235,000 jobs – the slowest pace of job creation since January and a dramatic slowdown from the previous month.