Wholesale price inflation jumped in February, driven by higher gasoline prices. This could mean higher prices for consumers in the weeks to come. (iStock)
Wholesale inflation has surged over the past year, with the producer price index (PPI) rising 10% annually in February, latest data published by the Bureau of Labor Statistics (BLS).
The PPI jumped 0.8% in February alone, according to the BLS report, following a monthly rise of 1.2% in January and 0.4% in December 2021. The PPI is a measure of the average change in domestic producers’ selling prices before their products reach consumers. .
The increase also came after the Labor Department announced that annual consumer inflation hit a third consecutive 40-year high in February, up 7.9% per year During the month. This was the highest level of inflation since January 1982. But now supply chain issues are driving up costs for producers, which could lead to higher levels of inflation in the coming months. come as selling prices rise.
Consumers might consider taking out a personal loan to pay off high-interest debt in the face of soaring inflation to reduce their monthly expenses. Visit Credible to find your personalized interest rate without affecting your credit score.
MORTGAGE RATES RISE AS RISE IN INFLATION CAUSES INVESTOR CONCERNS
Federal Reserve raises interest rates to fight inflation
Similar to the consumer price index (CPI), price increases for the PPI were driven by growth in food, energy and business services, according to the BLS report. In fact, nearly 40% of February’s monthly increase was attributable to higher gasoline prices, which rose 14.8%.
As inflation soars, the Federal Reserve announced at its March meeting on Wednesday that it was raising the federal funds rate by 25 basis points. The central bank’s rate hike is the first in three years, and economists predict the Fed will likely continue to raise rates this year and next.
“Job creation has been strong in recent months and the unemployment rate has fallen significantly. Inflation remains elevated, reflecting pandemic-related supply and demand imbalances, rising oil prices energy and broader price pressures,” the Federal Open Market Committee said in a statement. statement after the meeting.
Now, according to information from Morning Consult economist John Leer, raising rates too quickly could slow business growth.
“The Fed faces a delicate balancing act to achieve a soft landing,” Morning Consult said in a March 15 economic report. “He wants to raise rates to fight inflation, but he doesn’t want to end the recovery prematurely. The escalating war in Ukraine will make it even harder for the United States to continue growing this year. “
Borrowers may consider refinancing their home loan to take advantage of interest rates before they rise further and save on monthly expenses. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.
INFLATION REACHES ANOTHER 40-YEAR HIGH IN FEBRUARY
Conflict between Ukraine and Russia could push prices up, economist says
President Joe Biden continues to impose new sanctions on Russia amid the country’s conflict with Ukraine, recently announcing a ban on US imports of Russian oil, gas and energy and targeting what he has referred to as the “main thoroughfare” of Russia.
“I will do everything I can to minimize Putin’s price hike here at home and coordination with our partners,” Biden said.
As the conflict continues, prices could continue to rise despite the Fed’s best efforts to control inflation, according to Credit Union National Association senior economist Dawit Kebede.
“An increase in Federal Reserve interest rates will slow consumer demand by making the cost of borrowing more expensive,” Kebede said in response to rising inflation. “However, there is little the Fed can do to control prices caused by global conflict, just as there is little it can do to ameliorate supply chain disruptions.”
Consumers looking to reduce their monthly expenses before interest rates rise even higher might consider refinancing their private student loans. Contact Credible to speak with a student loan expert and get all your questions answered.
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