Wholesale prices jumped by double digits year-over-year in June, yet another reminder that inflation is still hounding the U.S. economy with no indication of subsiding soon.
The Bureau of Labor Statistics (BLS) reported last week that the producer price index (PPI), a measure of the average change over time in the selling prices received by domestic producers for their output, increased 11.3 percent from last year. This is the highest reading since the record 11.6 percent in March. (Related: INFLATION REPORT: Wholesale prices rose 10.8 percent over the past year.)
The BLS report indicated that the surge in producer prices is primarily driven by the big jump in energy costs. Almost 90 percent of the jump came from the 10 percent increase in final demand energy costs as prices for oil, natural gas and other products skyrocketed in June.
Food and trade service prices or the core PPI increased 6.4 percent on a 12-month basis, a slight dip from the 6.8 percent gain in May. The data was released a day after the BLS reported that the consumer price index (CPI), which measures the overall change in consumer prices based on a representative basket of goods and services over time, swelled 9.1 percent – the highest 12-month gain since November 1981.
Meanwhile, Federal Reserve officials are expected to push the interest rate increase to tame inflation closer to their long-run two percent goal, without causing a recession. The move will further make products more expensive, but the Fed is hoping to dampen people's willingness to spend money.
"Following the CPI release, traders were pricing in an 86 percent chance the central bank, at its meeting later this month, will raise benchmark interest rates by a full percentage point. That would be the largest such increase since the early 1980s," CNBC reported.
Also, the strength of the U.S. job market would mean that more people will have paychecks to spend, which will keep upward pressure on prices.
"Despite a modest improvement in supply conditions, price pressures will remain uncomfortable in the near term and bolster the Fed's resolve to prevent inflation from becoming entrenched in the economy," Mahir Rasheed, an economist at Oxford Economics, stated in a research note.
Survey: Biden's economic approval dipped to its lowest
The continuing high inflation has destroyed incomes, escalated price pressures on businesses, raised the risk of an economic meltdown and plummeted America's approval of President Joe Biden. This is not a favorable sign from the Democratic prospects in the November midterm polls.
According to the CNBC All-America Economic Survey, the president's economic approval went down five points from the prior survey in April to just 30 percent. Biden's economic record is supported by just six percent of Republicans, 25 percent of independents and 58 percent of Democrats.
To compare, President Donald Trump's economic approval was at 41 percent and President Barack Obama's rating was at 37 percent. Biden's approval on his overall handling of the presidency is at 36 percent, one point lower than Trump's worst rating. Fifty-seven percent of the survey participants disapprove of his handling of the presidency.
The survey engaged 800 people across the U.S. and found that 51 percent believe the president's efforts to combat inflation are making no difference, and 30 percent expressed that they are actually hurting. Just 12 percent say they are helping. The poll was held from July 7 to 10 and has set a margin of error of plus or minus 3.5 percent.
The results represent the worst economic outlook CNBC has ever recorded in the 15-year history of the survey.
Moreover, the poll concluded that Americans prefer Republican congressional control by a 44 percent to 42 percent margin. Both the Republican and Democratic survey participants say this could be attributed partly to the emergence of abortion as a significant issue. It remains to be seen if the intensity of abortion or other social issues remains in place by November and if inflation continues to be the leading concern.
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Watch the below video that talks about soaring wholesale prices.
This video is from the Dr. William Mount channel on Brighteon.com.
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