(Tony Sifert, Headline USA) The producer price index, which according to the U.S. Bureau of Labor Statistics measures changes in the wholesale prices of goods, has risen 11.2% in the last year, CNBC reported, with the PPI increasing 1.4% in March alone.
“On an unadjusted basis, final demand prices moved up 11.2 percent for the 12 months ended in March, the largest increase since 12-month data were first calculated in November 2010,” the BLS reported.
“The pipeline is literally chock full of inflation at the lower stages of production which means the consumer’s nightmare of steadily rising prices of everything they buy is not over yet,” Fwdbonds’s chief economist Christopher Rupkey told the Washington Examiner.
“What started as an inflation outbreak related to the pandemic and supply chain shortages has turned into a nightmarish cost-of-living crisis with no way out but for the Fed to engender . . . [an] economic downturn or recession,” he continued.
In an op-ed published by the New York Times, editor Spencer Bokat-Lindell agreed.
“The Federal Reserve is hoping to avoid [a worse-case scenario] by increasing short-term interest rates, which officials project will rise by 1.9 percentage points by the end of the year,” Bokat-Lindell wrote. “But this cure, if it works, may come with severe side effects.”
“In fact, for the nine instances since 1961 when the Fed raised rates to combat inflation, recessions followed all but one,” he continued.
Federal Reserve board member Christopher Waller told CNBC that the Fed was likely to raise interest rates “at a faster pace than normal” in order to combat inflation.
“I think the data has come in exactly to support that step of policy action if the committee chooses to do so, and gives us the basis for doing it,” Waller said.
“I prefer a front-loading approach, so a 50-basis-point hike in May would be consistent with that, and possibly more in June and July.”