Shortages and logistics are two factors causing supply chain disruptions. Those disruptions have producers charging even higher prices. 😒
The producer price index (PPI) rose 0.7% month-over-month. That’s higher than the 0.6% analysts expected. The PPI is now up 8.3% YoY, which means producers are now charging over 8% more for producing goods such as food and energy commodities, including natural gas. Some of the other big risers included industrial chemicals and motor vehicles. 💰
These higher prices might be good news for producers, but they’re most likely bad news for the rest of the economy. 👎 The PPI generally acts as a “sign of the way that things will be going” for its BFF, the CPI. The CPI, or consumer price index, is the index that measures inflation for consumers. Basically, that means when producers charge more, those higher costs tend to get passed down to consumers.
With all the inflation buzz, the PPI’s sustained highs might worry the Federal Reserve. The Fed has been weighing tapering bond purchases, allowing interest rates to start heading north. The U.S. 10-year bond was up 3.2% today to 1.344%.