The Bureau of Labor Statistics reported on June 14 that wholesale prices went up quickly in May as inflation hounds the U.S. economy.
The producer price index (PPI), which measures the average change over time in selling prices received by domestic producers of goods and services, is up 0.8 percent in May and 10.8 percent over the past year.
"The monthly rise was in line with Dow Jones estimates and a doubling of the 0.4 percent pace in April," CNBC reported.
"Producer price increases continue to shoot higher which means even more pipeline pressures for the consumer in the months to come," New York's FWDBONDS chief economist Christopher Rupkey told Reuters.
This is significant because prices at the wholesale level feed through to consumer prices, which are running at their highest levels since December 1981. The consumer price index increased 8.6 percent annually in May.
The markets were expecting the central bank to raise benchmark short-term borrowing rates to curb the worst inflation in the U.S. in 40 years. In response, the Federal Reserve raised interest rates on Wednesday, June 15, by 75 basis points – the largest hike since November 1994.
Renee Butler of Investopedia said: "When interest rates increase too quickly, it can cause a chain reaction that affects the domestic economy as well as the global economy. It can create a recession in some cases. If this happens, the government can backtrack the increase, but it can take some time for the economy to recover from the dip."
"My colleagues and I are acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials, like food, housing and transportation," Federal Reserve Chair Jerome Powell said, adding that the Fed's goal is a sustained inflation rate of two percent.
As the country nears the November midterm elections, inflation continues to be the biggest political challenge for President Joe Biden. A recent ABC News/Ipsos poll concluded that just 28 percent of voters approved of how Biden is addressing the inflation problems. (Related: BIDENFLATION: Wholesale prices in September and October rise to record highs.)
Biden blames Republicans for soaring inflation
Biden spoke at the AFL-CIO federation of labor unions conventions on Tuesday, June 14, and blamed the Republicans for "blocking" his plans to make inflation subside.
"Republicans in Congress are doing everything they can to stop my plans to bring down costs for ordinary families. That's why my plan is not finished and why the results aren't finished either," Biden argued in his campaign-like speech.
He said he is getting to bring down prices by asking the Strategic Petroleum Reserve to get more oil to market. He noted that the entire world is facing high inflation, and that in the U.S., "it's sapping the strength of a lot of families."
He went on to say that in relation to the food crisis caused by the war in Ukraine, he is planning to bring down food costs and is working to get Ukrainian grain out of the country and to the global markets. He conceded that there are complicating factors to do this, specifically the differences between Ukraine's rails and the rest of Europe.
"We're going to build silos, temporary silos in the borders of Ukraine, including in Poland, so we can transfer it from those cars into those silos and into cars in Europe, and get it out to the ocean and get it across the world," Biden said.
USA Today contributors and White House correspondents Michael Collins and Rebecca Morin wrote back in May that blaming the Republicans isn't a winning strategy.
"Biden is trying a two-pronged approach: promise Americans that high prices are the administration's top priority and blame Republicans for failing to offer a plan to give Americans relief," their article stated. "Analysts say voters won't buy that argument because Democrats, not Republicans, are in charge in Washington."
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