Wholesale prices jumped 1.4 percent in March from February to hit a record 11.2 percent annual increase, as widespread inflation affecting the US economy shows no signs of letting up.
The numbers released on Wednesday follow an 8.5 percent annual rise in consumer prices announced Tuesday, the highest increase since December, 1981.
The Producer Price Index published by the Department of Labor’s Bureau of Labor Statistics measures the price of goods and services that businesses pay to each other, while the Consumer Price Index (CPI) measures retail prices that consumers pay directly.
While the CPI is considered the benchmark for inflation measurements, wholesale metrics reflect conditions in the supply chains and production pipelines where disruptions have been driving inflation since the beginning of the pandemic.
More than half of the overall wholesale increase in March is due to a 5.7 percent jump in prices for energy, with a 20-percent jump in the price of diesel fuel in particular.
Indices for gasoline, vegetables, jet fuel, iron and steel scrap metal, and electric power also moved higher.
On the service side, prices moved up 0.9 percent in March following a 0.3 percent jump in February. Most of the service increase is due to transportation and warehousing services, which climbed 5.5 percent.
While economists agree that pandemic-induced supply chain disruptions lie at the heart of inflation now felt globally, some also point to the fiscal and budgetary response of the government in the pandemic’s aftermath.
“Starting in March 2020, in response to the disruptions of Covid-19, the U.S. government created about $3 trillion of new bank reserves, equivalent to cash, and sent checks to people and businesses,” Hoover Institution economist John H. Cochrane wrote in a January brief. “Mechanically, the Treasury issued $3 trillion of new debt, which the Fed quickly bought in return for $3 trillion of new reserves. The Treasury sent out checks, transferring the reserves to people’s banks. The Treasury then borrowed another $2 trillion or so, and sent more checks. Overall, federal debt rose nearly 30 percent. Is it at all a surprise that a year later inflation breaks out?”
Analysts also point to the war in Ukraine as a driver of inflation. Following Russia’s invasion of Ukraine on February 24, oil prices jumped from around $90 a barrel to more than $120, having settled in the last few weeks around $100.
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JUST IN: Annual wholesale inflation rises 11.2 percent in March https://t.co/XCzAiksnL2 pic.twitter.com/Wk5C4TdOoD
— The Hill (@thehill) April 13, 2022
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