Producer prices in the United States surged 0.6% in July, the largest jump in almost two years, according to MarketWatch. Meanwhile, core prices—what you get when you take out food, energy and trade margins—rose 0.3%. That was the third month of an upward trajectory.
What’s going on: Congress’s frantic spending to help us weather the pandemic isn’t increasing inflation. But that’s because there’s so little demand nowadays—businesses can’t raise prices because they need more customers to start buying again.
The NAM breaks it down: “Even with sharp increases in raw material costs in July, overall costs remain in check for now, especially on a year-over-year basis,” said NAM Chief Economist Chad Moutray. “Given the deflationary pressures seen in the economy in the spring months, it should not be a surprise that prices would bounce back strongly at some point.
“For its part, the Federal Reserve has pursued extraordinary monetary policy measures to help prop up the economy—providing a financial ‘bridge’ for consumers and businesses during the slowdown in activity, and it remains committed to its stimulative stance for the foreseeable future.”