The Labor Department reported Thursday that the U.S. producer price index rose at the fastest pace since hitting a record 11.6% in March
Inflation at the wholesale level climbed 11.3 per cent in June compared with a year earlier, the latest painful reminder that inflation is running hot through the American economy.
Thursday’s report on wholesale prices came a day after the Labor Department reported that surging prices for gas, food and rent catapulted consumer inflation to a new four-decade peak in June, further pressuring households and likely sealing the case for another large interest rate hike by the Federal Reserve. Consumer prices soared 9.1 per cent compared with a year earlier, the biggest yearly increase since 1981.
The Fed has embarked on an aggressive series of rate hikes that are intended to tame high inflation without causing a recession – a notoriously difficult challenge. But this week’s reports showing persistently high consumer and wholesale inflation pressures indicate that the Fed will remain under pressure to continue raising rates sharply in the coming months. The strength of the U.S. job market, with robust hiring and unemployment at a near-half-century low, means that more people have paychecks to spend, which will keep upward pressure on prices.
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