First, they told us inflation wasn’t happening. Then, they said it was temporary. Now they’re out of excuses.
The most recent data for consumer prices, most widely watched, came in at an astounding 7.9% annual increase. Yet that’s not the only index worth watching. The latest Producer Price Index was also just released on Tuesday, and it shows that the input prices facing businesses have soared 10% over the last year. This index captures the costs/expenses businesses face, and it is the preferred metric for inflation used by America’s central bank, the Federal Reserve.
Core PPI – excludes food, energy, and trade services – jumped 6.6% annually, 0.2% monthly
— Greta Wall (@GretaLWall) March 15, 2022
The Producer Price Index up 10% over the past 12 months.. Month over month increase was .8%. This is the inflation that companies feel to buy the stuff they need to make the stuff they sell to consumers. This is pressure for CPI Inflation. #Inflation #Economy
— Edward Lawrence (@EdwardLawrence) March 15, 2022
This latest data set is more than just a confirmation of what we already knew.
It officially makes this problem undeniable for the Federal Reserve, since this is the data set it follows most closely. At this point, they have no choice but to stop printing money like crazy.
What’s more, these new numbers utterly undercut the Democrats’ inflation narrative. From Elizabeth Warren to Bernie Sanders, many progressive Democrats have tried to blame rising consumer prices on “corporate greed,” rather than their reckless spending policies and rampant money-printing.
Shock. Shock. Shock. Gas prices are at the highest level in 7 years while Exxon Mobil, Chevron, Shell & BP made nearly $25 billion in profits last quarter – the highest level in over 7 years. The problem is not inflation. The problem is corporate greed, collusion & profiteering.
— Bernie Sanders (@SenSanders) February 16, 2022
What happens when only a handful of giant grocery store chains like @Kroger dominate an industry? They can force high food prices onto Americans while raking in record profits. We need to strengthen our antitrust laws to break up giant corporations and lower prices. pic.twitter.com/DMa9Z7adFr
— Elizabeth Warren (@SenWarren) January 7, 2022
Economists across the political spectrum have rejected this notion out of hand, because it never made any sense. (Corporations are no more greedy today than they were 5 years ago.)
Yet the Producer Price Index makes this narrative even harder to believe. Think about it like this: The prices facing businesses have risen 10%, but consumer prices have only risen 7.9%.
So, if anything, businesses are eating some of the loss rather than passing it all on to consumers. This situation hardly seems like price-gouging. Of course, don’t expect it to actually change the narrative—it was always about politics, not economic reality.