On Wednesday, US Labour Department said that its Producer Prices Index, which keeps track of an average change in prices received by the domestic producers, had witnessed its biggest increase since December 2009 in January as a steep upswing in the prices of goods and services has been stoking possibilities of an abrupt hike in inflation later this year.
According to US Labour Department data released earlier in the day, US Producer Price Index for final demand climbed as much as 1.3 per cent in January, marking up the Index’s biggest gain since 2009 when the Government went through a sweeping overhaul of the categories, while over the past twelve months including January, US Producer Prices Index climbed as much as 1.7 per cent amid growing concerns that the US President Joe Biden’s $1.9 trillion fiscal stimulus plan might overheat the economy.
US Producer Price Index scores biggest gains since 2009 in January
Compounding the narratives further, in the day’s Labour Department data comes over the heels of US Fed’s January 26-27 FOMC minutes report that underscored concerns over a likely pick up in inflations over the later part of the year, while the FOMC minutes report had also revealed an accommodative stance from Fed policymakers to address a likely rise in inflation alongside a scuffling labour market which has been failing to create new jobs since later last year.
However, although the US Labour Department report had unveiled that costs of goods surged by 1.4 per cent in January after picking up 1.0 per cent a month earlier with core goods’ prices rising as much as 0.8 per cent, driving possibilities of a rapid rise in inflation, the US Central Bank had signalled at its January FOMC minutes that it would more likely to tolerate a higher inflation in exchange for a boost in re-hiring alongside business expenses.