Inflation For Businesses Reaches 7.8%, The Highest Level Ever Recorded
Graeme Jennings-Pool/Getty Images

Inflation for businesses reached a year-over-year rate of 7.8% in July — the highest level ever recorded.

On Thursday morning, the Bureau of Labor Statistics showed that the Producer Price Index — which tracks changes in input prices for businesses and other domestic producers — increased by 1.0% during the month of July alone. 

According to the agency:

Nearly three-fourths of the July increase in the final demand index can be traced to a 1.1-percent advance in prices for final demand services. The index for final demand goods rose 0.6 percent. 

The index for final demand services rose 1.1 percent in July, the largest  one-month increase since data were first calculated in December 2009. Nearly half of the broad-based advance in July is attributable to margins for final demand trade services, which jumped 1.7 percent… Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services also moved higher, 0.6 percent and 2.7 percent, respectively.

The rise in transportation expenses matches the newest data for the Bureau of Labor Statistics’ Consumer Price Index, which was released on Wednesday. Over the past year, prices for used vehicles have increased by 41.7%; meanwhile, gasoline and fuel oil saw respective price hikes of 41.8% and 39.1%.

The year-over-year 7.8% rate marks the eighth consecutive month of increase for the Producer Price Index. In December, January, February, March, April, May, and June, the Producer Price Index reached annual rates of 0.8%, 1.6%, 3.0%, 4.1%, 6.2%, 6.6%, and 7.3%, respectively.

In June, Bill Adams — senior economist at PNC Financial Services Group — commented that “PPI matters much more than it usually does because inflation matters much more than it has for years.”

“We haven’t had an inflationary shock like this in a decade,” he explained. “We know we’re in the middle of an inflationary shock but what we still don’t know is how bad it is. That’s a big part of what we’re looking to these inflation data for.”

The main inflation index used by the Federal Reserve — which has not yet revised its near-zero interest rate target or scaled back its $120 billion monthly asset purchases — to make monetary policy decisions recently reached its highest level since the early 1990s. According to the Bureau of Economic Analysis, the Personal Consumption Expenditures Price Index has risen 4% between June 2020 and June 2021. 

The Daily Wire   >  Read   >  Inflation For Businesses Reaches 7.8%, The Highest Level Ever Recorded