Wholesale prices are a good indicator of future inflation because producers and manufacturers are paying for these goods a couple of months before their finished products hit store shelves. Yesterday, the Department of Labor released a wholesale inflation report that indicated inflation would remain high throughout the summer and likely into fall — bad news for Joe Biden and the Democrats.
This comes on the heels of the April inflation numbers showing a rise of 8.3 in the CPI. The double whammy for the Biden administration has left them scrambling to put lipstick on a pig.
Economists were expecting a 10.7 percent rise in wholesale prices. They got 11 percent, which includes the volatile food and energy sectors.
Without them, the core price index shot up 0.6% for the month, following a 0.9% increase in March. Over the past 12 months, core prices were up 6.9%.
Overall, prices for goods jumped 1.3% last month, the fourth consecutive rise and the biggest contributor to the headline inflation figure. That included gains for items like motor vehicles, diesel fuel and eggs. Prices for construction also soared by 4% in April, while prices for services held steady last month.
Energy moderated in April, rising by 1.7% after surging 6.4% the previous month following the Russian invasion of Ukraine.
The surge in wholesale prices comes on the heels of a separate Labor Department report released on Wednesday that showed the consumer price index climbed 8.3% in April from the previous year, far more than economists expected. Consumers are paying more for everyday necessities, including groceries, gasoline and cars.
So far, the Federal Reserve Bank has taken a cautious approach to battle inflation, raising interest rates by half a percentage point this week after a similar rise earlier this year. This has cheered the markets, which fear bigger corrections unless the Fed’s medicine works.