US

Wholesale inflation jumps 9.6% in biggest increase since records began in 2010

Prices at the wholesale level surged by a record 9.6 percent in November from a year earlier, in another sign of the ongoing inflation pressure that is hurting President Joe Biden‘s approval ratings.

The US producer price index, which measures inflation before it reaches consumers, rose 0.8 percent in November after a 0.6 percent monthly gain in October, the Labor Department said on Tuesday.

The annual gain set a new record, surpassing the old records for 12-month increases of 8.6 percent set in both September and October. The records on wholesale prices go back to 2010.

Rising wholesale prices are putting a pinch on businesses and forcing them to pass along higher costs to consumers, with a new survey finding the most small businesses raising costs since 1979.

Prices at the wholesale level surged by a record 9.6 percent in November from a year earlier, the fastest rate since records began in 2010

A person shops in the meat section of a grocery store in Los Angeles last month. U.S. consumer prices have increased as inflation rises to a level not seen in 39 years

A person shops in the meat section of a grocery store in Los Angeles last month. U.S. consumer prices have increased as inflation rises to a level not seen in 39 years

The National Federation of Independent Business survey released this week found that the net percent of owners raising selling prices increased six points, to 59 percent, the highest level since the Carter administration. 

Price hikes were most frequent in wholesale (88 percent higher, 0 percent lower), construction (75 percent higher, 7 percent lower), and manufacturing (66 percent higher, 1 percent lower). 

Inflation has become a major political liability for Biden, who last week called rising prices a ‘bump in the road.’

A recent poll found that just 28 percent of Americans believe Biden is handing inflation correctly while 69 percent disapprove, and the issue is providing ammunition to his conservative critics 

In a statement to DailyMail.com on Tuesday, Republican National Committee Chairwoman Ronna McDaniel blamed soaring inflation on Democrats and slammed Biden’s multi-trillion Build Back Better agenda. 

‘Americans are paying higher prices for gifts, gas, and groceries this holiday season because of Democrat policies,’ she said. 

An NFIB survey found the net percent of small business owners raising selling prices increased six points, to 59 percent, the highest level since the Carter administration

An NFIB survey found the net percent of small business owners raising selling prices increased six points, to 59 percent, the highest level since the Carter administration

A sign in La Taquiza Taqueria in Lexington, Kentucky warns of price increases in September. Rising wholesale costs have forced many business operators to hike prices for consumers

A sign in La Taquiza Taqueria in Lexington, Kentucky warns of price increases in September. Rising wholesale costs have forced many business operators to hike prices for consumers

‘As producer prices are up a record 9.6 percent from last year, Biden and the Democrats want families and small businesses to foot the bill for their Build Back Broke agenda,’ said McDaniel. 

‘Rather than address skyrocketing prices, Biden is lying as he pushes for trillions more in reckless spending. Americans deserve better than Biden’s failed Build Back Broke agenda,’ she continued. 

Biden acknowledged Friday that inflation was a ‘bump in the road’ – but predicted that prices would drop from current levels following new inflation data showing that consumer prices rose 6.8 percent in November from a year ago.

‘So I think it’s it really is it’s a real bump in the road. It does affect families,’ Biden said in response to a question at a democracy summit held virtually at the White House. 

‘You walk into a grocery store and you’re paying more for whatever you’re purchasing,’ he continued. But he predicted: ‘I think it’s the peak of the crisis.’

Observers say the Federal Reserve is poised this week to execute a sharp turn toward tighter interest-rate policies, with inflation accelerating and unemployment falling faster than expected.

On Wednesday, the Fed will likely announce that it will reduce its monthly bond purchases at twice the rate that Chair Jerome Powell outlined just six weeks ago. 

The consumer price index hit a 39-year high of 6.8% on an annual basis in November

The consumer price index hit a 39-year high of 6.8% on an annual basis in November

Those bond purchases are intended to lower longer-term rates, so winding them down more quickly – likely by early spring – will lessen some of the monetary aid the Fed supplied after the pandemic erupted last year.

Fed officials are also expected to forecast that they will raise their benchmark short-term rate, which has been pegged near zero since March 2020, two or three times next year. 

Rate hikes would, in turn, increase a wide range of borrowing costs, including for mortgages, credit cards and some business loans. Just three months ago, the Fed had penciled in barely one rate increase in 2022.

Matthew Ryan, Senior Market Analyst at Ebury, told DailyMail.com on Tuesday: ‘We expect tapering to come to an end in March next year, which would allow the Fed to begin raising rates at the May 2022 meeting, with two or three additional hikes to follow during the remainder of 2022.’

‘We expect a doubling in the pace at which net asset purchases are reduced from $15 billion to $30 billion, effective from January,’ he added. 

‘Following Powell’s testimony to the US Treasury, we think that this is now largely expected by the market, and the reaction in the dollar to such an announcement would be neutral-to-mildly positive.’ 


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