On Wednesday, the US Commerce Department data had unveiled that US producer prices had accelerated by the steepest pace in more than 10 years and a half last month, casting further glooms on a scary surge in inflation indicators as a robust economic recovery stemming higher domestic demands coupled with a supply restrain alongside a sheer shortage of raw materials had ballooned producers’ spending on consumers’ goods and services in June.
On top of that, latest uptick in US producer prices came against the backdrop of a US Consumers Prices Index that had accelerated by the strongest pace in more than 13 years in June, adding strains into a US economy which had already been languishing amid frets of what could be a prolonged period of higher inflation.
Fuelling up inflation worries further, US Fed Chair Jerome Powell was quoted saying in a congressional hearing earlier in the day “Inflation has increased notably and will likely remain elevated in coming months before moderating,” however, had maintained a dovish tone that a torrential high-tide in core inflation would be ‘transitory.’
US Producers price Index rises by the most in 10-1/2 years in June
In tandem, according to US Commerce Department data, US producer price index for final demand soared 1.0 per cent in June that followed an increase of 0.8 per cent a month earlier, while goods prices jumped 1.2 per cent after surging as much as 1.5 per cent in May.
Apart from that, over the past twelve months through June, the US producer price index had mounted 7.3 per cent, remarking the highest year-on-year gain since the November of 2010. Meanwhile, referring to producers’ vulnerability amid a robust demand-surge, a Chief Economist at FHN Financial in New York, Chris Low said following reveal of the data, “Producers are still struggling to meet robust consumer demand in the face of supply chain bottlenecks and re-staffing difficulties.
After months of steady wholesale price increases, there's still ample pressure for pass through to broader consumer price increases. ”