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US Wholesale Inflation Rises by Most in 3 Years

bloomberg.com

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Re: US Wholesale Inflation Rises by Most in 3 Years

#5

Post by throw-qqqqq »

isbwkisbakadqv wrote: post #4

2.8% doesn’t seem that crazy to me? Don’t we target like 2-2.5?

It’s the change/rise that is high, not the value itself.

> The producer price index increased 0.9% from a month earlier, the largest advance since consumer inflation peaked in June 2022, according to a Bureau of Labor Statistics report out Thursday

Re: US Wholesale Inflation Rises by Most in 3 Years

#7

Post by estearum »

isbwkisbakadqv wrote: post #4

2.8% doesn’t seem that crazy to me? Don’t we target like 2-2.5?

The Fed targets 2% at PCE (consumer) whereas this is PPI (wholesale/producer). Not always 1 to 1 but in general you expect PPI to be a leading indicator for what's coming for PCE. Part of the attention is for sure people being vigilant to see the earliest effects of the tariffs and... here they are pretty unambiguously.

The more significant concern it seems to me is the rate of increase. Nearly a full percentage point in a month seems like a lot, but I'm no expert.

Re: US Wholesale Inflation Rises by Most in 3 Years

#9

Post by nimbius »

isbwkisbakadqv wrote: post #4

2.8% doesn’t seem that crazy to me? Don’t we target like 2-2.5?

According to the Federal Reserve, for many years, inflation in the United States has run below the 2 percent goal. higher prices for essential items, such as food, gasoline, and shelter, add to the burdens faced by many families, especially those struggling with lost jobs and incomes. At the same time, inflation that is too low can weaken the economy. When inflation runs well below its desired level, households and businesses will come to expect this over time, pushing expectations for inflation in the future below the Federal Reserve’s longer-run inflation goal. This can pull actual inflation even lower, resulting in a cycle of ever-lower inflation and inflation expectations.

The fed argues that, If inflation expectations fall, interest rates would decline too. In turn, there would be less room to cut interest rates to boost employment during an economic downturn.

this economics explanation feels like gaslighting every time i hear the fed mention it. the reserve literally pushed negative rates and quantitative easing for so long that people came to expect prosperity as a feature of the economic framework of the nation, and now that we have rampant inflation that cannot be controlled by normal means (prime rate) the fed somehow wants us all to understand its our fault for enjoying affordable burger meat.

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