Wholesale prices spiked at a near-record 11.3% annual rate, the Labor Department reported Thursday in another sign of out-of-control inflation that Republicans are blaming on overspending by President Biden and congressional Democrats.
The Producer Price Index, a measure of prices paid by wholesalers, jumped 1.1% in June alone, more than analysts expected. The increase was largely due to high gas prices.
Consumer prices also soared at a 9.1% annual rate, a 41-year high, stated the government report for June, released Wednesday.
Christopher Waller, a member of the Federal Reserve’s Board of Governors, said Thursday that he would be open to supporting a huge 1 percentage point increase in the Fed’s key short-term interest rate later this month if upcoming economic data points to robust consumer spending.
Such an increase would further intensify the Fed’s fight against accelerating inflation but also heighten the risk that the central bank’s anti-inflationary policies would cause a recession. The Fed hasn’t raised its rate by 1 percentage point in one fell swoop for several decades.
In a speech in Victor, Idaho, Mr. Waller said he still supports a 0.75% point increase at the central bank’s next policymaking meeting in two weeks, even after the report Wednesday showed consumer prices accelerating.
SEE ALSO: Biden tagged as ‘pay-cut president’ as soaring inflation erodes wages again
But further economic data — including a report Friday on June retail sales and several reports on home sales and prices — will be released before the Fed’s next meeting.
If those figures “come in materially stronger than expected,” Mr. Waller said, “it would make me lean towards a larger hike.”
Republican National Committee Chairwoman Ronna McDaniel said the rising prices for producers are a result of last year’s nearly $2 trillion pandemic-related relief bill, which passed Congress with no Republican support.
“Every month since Biden’s $1.9 trillion boondoggle was signed into law, prices have gone up and real wages have gone down, yet Biden and Democrats point fingers in every direction but their own,” Mrs. McDaniel said. “American families and small businesses cannot afford Biden’s Great American Pay Cut, and Democrats will pay the price for rubber-stamping this reckless agenda in November.”
Mr. Biden said Wednesday that the rate of inflation for June is misleading because gas prices have come down about 40 cents per gallon since the end of last month. He called on oil companies to pass along more savings to consumers.
At the start of last year, wholesale prices were rising at a rate of less than 2%.
Alfredo Ortiz, president and CEO of the conservative Job Creators Network, said the back-to-back inflation reports are “just the latest evidence that ‘Bideninflation’ is accelerating.”
“The worst inflation in four decades is a direct result of President Biden’s spending spree and cutbacks on domestic energy production,” Mr. Ortiz said. “We are in a recession and small businesses are bearing a disproportionate share of the pain.”
The rise in wholesale prices was the seventh consecutive month in which producer prices saw a double-digit annual gain. Core producer prices, excluding food and energy, increased by 6.4%
Recent surveys from National Federation of Independent Business and the U.S. Chamber of Commerce show the worries of business owners about the next 12 months. Among the findings, 88% of small business owners say they are “concerned” about the impact of inflation on their business, half of all small business owners report being unable to fill job openings, and 77% are concerned about the impact of rising interest rates.
Mr. Waller said Wednesday’s worrisome consumer inflation report sealed the case for a three-quarter-point hike, rather than the half-point increase that Fed Chair Jerome H. Powell had suggested was also on the table for the central bank’s upcoming meeting.
But he discounted concerns that the economy might be nearing a recession, pointing to healthy job gains this year and an unemployment rate that is near a half-century low.
Those job gains, Mr. Waller said, “leave me feeling fairly confident that the U.S. economy did not enter a recession in the first half of 2022 and that the economic expansion will continue.”
— This article is based in part on wire-service reports.