US producer prices rose at their fastest pace in over a decade, fuelling concerns that inflation in the American economy could prove to be much stickier than first thought.
The producer price index jumped 7.3 per cent annually in June, the biggest annual increase since November 2010, according to figures published by the US Labour Department today.
Shortages of key raw materials has prompted firms to compete with one and another to secure key inputs in production processes, which is putting upward pressure on factory prices.
Factories may also be passing on elevated staffing costs and higher commodity prices onto customers in an attempt to protect their margins.
Robust demand for raw materials and basic inputs triggered by the US’s sharp economic rebound from the Covid crisis has also enabled producers to increase prices for their goods without severely impacting the quantity of products sold.
The PPI jumped one per cent over the last month, up from eight per cent in May. The biggest contributor was the services sector, possibly the result of businesses upping prices to offset higher staffing costs.
Economists polled by Reuters had forecast the PPI increasing 0.6 per cent in June and rising 6.8 per cent year-on-year.
The figures come as the US reported the highest annual increase in consumer prices since August 2008 yesterday.