Share to Twitter Share to Linkedin Inflation has been rising since November 2020, largely due to the reopening of the economy – which led to greater consumer demand, plus supply chain constraints. In June and again in July, the consumer price index or CPI rose by 5.3% on a year-over-year basis, marking the largest such increase since July 2008. You would have to go back to February 1991 to find a larger increase. Despite the Fed suggesting this round of inflation will be transitory, some experts believe otherwise. While we cannot know with certainty how high inflation will rise or how long it will persist, there are a few clues we can turn to. Perhaps the most telling is the producer price index or PPI. PPI: Driver of CPI The producer price index measures the change in prices for goods and services at the producer level. When a company has to pay more to produce their products, they will often pass these higher costs onto the consumer. Price changes at the consumer level are reflected in the consumer price index. The following graph shows the year-over-year percentage change in PPI and CPI from November 2010 through July 2021. In July… Read full this story
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