Inflation is Sky High and Still Rising

Inflation is Sky High and Still Rising

December 16, 2021

Wholesale prices rose rapidly in November and signaled that U.S. inflation is likely to remain high well into 2022.

The producer price index climbed 0.8% last month, the government said Tuesday, easily exceeding Wall Street expectations. Economists polled by The Wall Street Journal had forecast a 0.5% advance.

The increase in wholesale prices in the past 12 months rose to 9.6% from 8.8%, marking the biggest advance since a major change in the index in 2009.

Wholesale inflation is likely rising at the fastest pace in 40 years but the index was recalculated in 2014 using different methodology.

Companies have largely passed on higher costs to business customers and consumers. The consumer price index, for instance, rose sharply again last month to push the increase in the cost of linging to teh fastest rate in 39 years. A separate measure of wholesale inflation that strips out the most volatile goods and services rose a bit less in November. The so-called core rate climbed 0.7% for the month.

Over the past year the core rate of inflation has risen 6.9%, up from 6.3% in the prior month.

The core rate strips out food, energy and trade margins and is usually gives a more stable picture of inflationary trends. Yet even the core rate shows worsening inflation.

Big picture: High inflation isn’t going away soon.

A combination of labor shortages and trouble obtaining business supplies has forced companies to raise prices. They can’t get enough of either to produce all the goods and services customers want.