Biden's Poor Energy Policies Drive Wholesale Prices Higher, Putting Pressure on American Consumers
Written by: A. Hamilton
The latest report from the Bureau of Labor Statistics reveals that wholesale prices in the United States picked up in February, signaling that inflation pressures remain elevated. However, what the report fails to highlight is the significant role that President Biden's failed energy policies have played in driving these prices higher.
According to the Bureau of Labor Statistics, wholesale costs rose by 0.6% in February, double the expectations of economists. On an annual basis, the producer price index increased by 1.6%, surpassing the forecasted 1.2% and marking the largest year-over-year gain since September.
The release from the Bureau of Labor Statistics points out that nearly 70% of the rise in February can be attributed to the index for final demand energy, which saw a significant jump of 4.4%. This demonstrates the impact of rising energy prices on overall wholesale costs.
Excluding energy and food prices, the index still rose by 0.4% in February, double what economists had anticipated. Furthermore, over the 12-month period, the index increased by 2.8%, well above the expected gain of 1.9%. These figures indicate that inflationary pressures are persisting and are not showing signs of easing.
Kathy Jones, the chief fixed income strategist for the Schwab Center for Financial Research, noted on “X” that the PPI (Producer Price Index) came in stronger than expected, driven by higher insurance costs among other categories. While she mentioned that it is not a breakout to the upside, the declining trend in inflation is leveling off. However, it is essential to recognize that the Biden administration's energy policies are contributing to the stagnant inflationary trend.
The report also highlighted the rise in gasoline and housing costs, which led to a 0.4% increase in the consumer price index earlier this week. This further confirms that inflation is proving stickier than initially anticipated. Despite these concerning signs, the Federal Reserve is still expected to lower interest rates this summer, potentially at its June meeting, according to the March testimony of Federal Reserve Bank Chairman Jerome Powell before the House Financial Services Committee.
Wholesale gasoline prices rose by a staggering 6.8% last month, with increases also seen in the prices of diesel and jet fuel. On the other hand, prices for essential commodities like hay, hayseeds, oilseeds, iron, steel scrap, and asphalt fell. However, food prices rose by 1.0%, primarily due to increases in the costs of eggs and beef.
The report reveals that excluding food and energy, goods prices rose by 0.3%, matching January's gain. This suggests that the deflation of goods, which has been a major driver of lower inflation, is coming to an end. As a result, services will need to pick up the slack in easing price pressure.
Services gained 0.3% in February after a 0.5% increase in the previous month. Notably, a 3.8% surge in the costs of hotel and motel rooms accounted for a significant portion of the increase in services prices.
Other areas that experienced price hikes include outpatient care, airline tickets, securities brokerage, dealing, investment advice, and portfolio management fees.
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While the report also highlights a rebound in retail sales by 0.6% in February, it is crucial to examine the underlying factors. Analysts point out that the decline in January's retail sales was blamed on inclement weather, but it also followed a strong Christmas season for retailers.
This month's weakness suggests that perhaps the consumer is not as healthy as expected, raising concerns about the overall state of the economy as we head into the summer.
President Biden's energy policies have undoubtedly contributed to the rising wholesale prices, putting a strain on American consumers. As energy costs continue to soar under this administration, it is imperative to reassess these policies and prioritize the well-being of the American people.
The impact of these failed economic policies on everyday Americans cannot be ignored.
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