Prices paid to U.S. producers rose at an annual rate of 10% in February on higher costs of goods, further highlighting record-setting inflation as the Federal Reserve prepares to raise a key interest rate this week.
The Labor Department reported Tuesday that the spike in the producer price index for final demand increased at 0.8% from the prior month, following an upwardly revised 1.2% gain in January.
It was the biggest increase in the producer price index since 2009, with energy costs accounting for two-thirds of the rise. High inflation, which began last summer, is expected to persist as Russia’s war in Ukraine impacts oil prices.
Consumer prices hit an annual rate of 7.9% in February, a 40-year high.
The central bank will announce its decision on a rate increase on Wednesday, with Fed Chairman Jerome Powell having predicted a hike of one-quarter percentage point. Raising interest rates is an effort to dampen inflation, but it also leads to higher borrowing costs and generally curbs job growth.
High inflation is also a prominent issue in the midterm elections. Republican National Committee Chairwoman Ronna McDaniel said the Biden administration isn’t tackling inflation.
“Prices are skyrocketing, real wages continue to fall, and Americans are being left behind in Biden’s failed economy,” she said. “Biden and the Democrats have no one to blame but themselves and their reckless spending agenda for the highest producer price increase on record. Their failures are devastating to American small businesses, families, and workers.”
The White House announced Tuesday a new initiative aimed at improving “supply chain data flow,” a step that officials said will ultimately lower costs for consumers.
Transportation Secretary Pete Buttigieg and National Economic Council Director Brian Deese launched the Freight Logistics Optimization Works, an information-sharing initiative “to pilot key freight information exchange between parts of the goods movement supply chain,” the White House said.
• Dave Boyer can be reached at dboyer@washingtontimes.com.
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