* The producer price index increased 0.7% in August from a month ago, above the 0.6% Dow Jones estimate.

* Final demand prices rose 8.3% from a year ago, the biggest increase on record going back to 2010.

* The move showed that inflationary pressures are likely to persist.

The Federal Government infused our economic system with huge sums of cash – of “money” with no greater value than the paper it is printed upon. There is no escaping the impact of that in market activity and the perpetual process of exchanging value for value in the economy – prices increase – inflation will escalate.

Many economists attempt to redirect attention from government inflating the economy to the COVID pandemic as a significant cause, but whatever the impacts of COVID, trillions of dollars flooding the market suffices to explain all that is happening.

As its name implies, as a consequence of inflation, prices that producers got for final demand goods and services surged in August at their highest annual rate since at least 2010, according to the Labor Department.

The producer price index rose 0.7% for August, above the 0.6% Dow Jones estimate, though below the 1% increase in July.

On a year-over-year basis, the gauge rose 8.3%, which is the biggest annual increase since records have been kept going back to November 2010.

The inflation is evident in supply chain issues, a shortage of various consumer and producer goods, generated by the easy flow of cash. Federal Reserve officials say they expect inflationary pressures to ease through the year, but the fact is pressures have remained stubbornly persistent. The most recent numbers indicate that the trend will likely continue. Other economic observers say they expect the economy to “fizzle” in a gradual decline as the impacts spread throughout the system.

Excluding food, energy and trade services, final demand prices increased 0.3% for the month, below the 0.5% Dow Jones estimate. Still, that left core PPI up 6.3% from a year ago, also the largest record increase for data going back to August 2014.

Final demand services rose 0.7% for the month, thanks to a 1.5% gain in trade services, or the margins received by wholesalers and retailers. Transportation and warehousing costs surged 2.8%.

About one-third of the overall gain came from health, beauty and optical goods, which jumped 7.8%. Prices related to outpatient hospital care held back the gains, falling 1.5%.

Prices for final demand goods rose 1% for the month, pushed primarily by a 2.9% gain in foods which in turn came from an 8.5% surge in meat prices. Slaughtered poultry prices surged 11%. Prices fell for iron, steel and diesel fuel.


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