Wholesale prices have risen by a record 9.7% throughout 2021. According to a report, this set a new annual record and is additional evidence of inflation in the U.S. economy.
The Labor Department reported Thursday that its producer price index (measures inflation) increased only 0.2% in December compared to November when prices increased by 1%.
The 9.7% increase was less than the revision of 9.8% for the 12 months that ended in November. However, the government relies on the change from December to December to determine the annual increase. Based on that, the 9.7% increase was the fastest annual jump ever recorded, much higher than the 0.8% increase in 2020 and the 1.4% increase in 2019.
Core inflation at the wholesale level rose 0.5% per month in December, down from a 0.9% increase in November. The price of core goods increased 8.3% in the 12-month period that ended in December.
The decline in overall inflation on a wholesale level was due to a massive 3.3% drop in energy prices and a 0.6% drop in the cost of food.
While the overall price increases in December were lower than estimates, economists warned that the nation faces some difficult months ahead on the front of inflation.
“Persistent supply disruptions will pin producer prices near record levels in the near term, especially given a rapidly spreading omicron variant that will fan inflation pressures,” said Kathy Bosjancic, chief U.S. economist at Oxford Economics. She noted that Thursday’s report affirmed the notion that the Federal Reserve will start raising interest rates in March.
The price increases at retail and wholesale levels are largely due to the snarled supply chains in the middle of a surge in demand.