That’s at least how many years it’s been since a U.S. government index measuring the prices that businesses pay for goods jumped as much as it did in March, signaling a growing threat that increases will be passed on at the consumer checkout.
The index for prices of goods rose 1.7% between February and March, according to new Producer Price Index (PPI) data released Friday by the Bureau of Labor Statistics. It was the largest monthly increase since the bureau began measuring so-called final demand goods data in December 2009. Most of the increase was due to rising energy prices, like a 8.8% hike in the cost of gasoline.
The overall PPI, which also measures the price of services, increased 1.0% in March, twice as much as economists expected. The costs for producers—or businesses that make the stuff we buy—can be an important indicator of whether consumers will see more price increases, limiting purchasing power because each dollar buys less. While consumer inflation has been pretty subdued so far, the next test will be March figures, due to be released on Tuesday.
Economists say much of the business price increases so far can be attributed to the fact that we’re venturing out and buying more, buoyed by government stimulus and fading anxiety about the COVID-19 pandemic. Businesses are also having a hard time getting a hold of materials, which also drives up prices. Some economists see inflation easing up, though, as supply shortages fade and the economy adjusts to the new level of demand.