Expert Opinion
The US Producer Price Index for June 2021
Written By
Yash
- Aug 11, 2021
The US Producer Price Index for June 2021 has been released. Find out all the details here.
The US Producer Price Index had a boost in June 2021. This was the biggest annual increase in nearly a decade. It also shows that the conditions of high inflation could persist for some time. This is because the supply chains are stained due to the strong demand boosted by the economy's recovery.
Our article will tell you everything about the latest Producer Price Index of June 2021.
Inflation May Be Close to its Peak
The Labor Department released the Producer Price Index amidst reports that consumer prices experienced the highest increase in more than 12 years in June. However, there are some signals that the current inflation is close to its peak. In June, the underlying producer prices increased at an average speed.
Federal Reserve Chair Jerome Powell gave a statement on Wednesday in a congressional hearing. He has had a long-standing position that high inflation is transitory. His view is similar to that of the White House and other economic experts. "inflation has increased notably and will likely remain elevated in coming months before moderating. Strong demand in sectors where production bottlenecks or other supply constraints have limited production has led to especially rapid price increases for some goods and services, which should partially reverse as the effects of the bottlenecks unwind."
Chris Low, the chief economist at FHN Financial in New York, said the following statement. "Producers are still struggling to meet robust consumer demand in the face of supply chain bottlenecks and re-staffing difficulties. After months of steady wholesale price increases, there's still ample pressure for pass-through to broader consumer price increases." But there is still doubt that this occurrence of high inflation is temporary. The Fed's Beige Book report is a collection of anecdotes from companies across the nation. It showed that "while some contacts felt that pricing pressures were transitory, the majority expected further increases in input costs and selling prices in the coming months."
"We believe this will be the peak in the pace of wholesale inflation as base effects ease, but ongoing friction between supply and demand will continue to keep prices sticky through 2021 and into 2022," said Mahir Rasheed, a US economist at Oxford Economics in New York. "That should hold back the June PCE inflation data, but even so, it looks like the monthly change in core PCE inflation will be strong for June," said Daniel Silver, an economist at JPMorgan in New York.
"The bulk of this inflation can be attributed to continued increases in the cost of edible fats and oils, proteins, packaging, and transportation," Chief Financial Officer David Marberger said. Fastenal CEO Dan Florness said the following on Tuesday. "There's a ton of inflation going on. There's inflation because of disruption in shipping, i.e., the cost of moving the container, and this is pretty public information, so I don't need to cite figures. But it's gotten really expensive to move a container across the ocean."
Producer Price Index Final Demand
Key: Sum – S, Change – C, Goods – G, Food – F, Energy – E, Trade – T1, Transport – T2, Others – O.
|
S
|
– (F, E, & T)
|
G
|
F
|
E
|
– (F & E)
|
S
|
T1
|
T2
|
O
|
C
|
C – (F, E, & T)
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
June
|
0.3
|
0.3
|
0.4
|
-4.9
|
9.6
|
0.1
|
0.2
|
-0.1
|
1.3
|
0.3
|
-0.7
|
0.1
|
July
|
0.5
|
0.4
|
0.5
|
0.9
|
4.1
|
0.3
|
0.5
|
0.9
|
-0.6
|
0.4
|
-0.3
|
0.3
|
Aug
|
0.2
|
0.2
|
0.4
|
0.3
|
1.0
|
0.3
|
0.2
|
-0.1
|
-0.8
|
0.3
|
-0.3
|
0.4
|
Sep
|
0.3
|
0.4
|
0.4
|
1.7
|
-0.3
|
0.3
|
0.2
|
-0.3
|
0.6
|
0.4
|
0.3
|
0.8
|
Oct
|
0.6
|
0.2
|
0.5
|
2.1
|
0.5
|
0.0
|
0.7
|
1.5
|
1.1
|
0.1
|
0.6
|
0.9
|
Nov
|
0.0
|
0.2
|
0.4
|
0.2
|
1.7
|
0.3
|
-0.2
|
-0.7
|
-0.5
|
0.2
|
0.8
|
1.0
|
Dec
|
0.3
|
0.4
|
0.9
|
-1.4
|
4.9
|
0.5
|
0.0
|
-0.7
|
-0.2
|
0.4
|
0.8
|
1.3
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Jan
|
1.2
|
1.0
|
1.6
|
1.6
|
5.1
|
0.8
|
1.0
|
0.8
|
0.7
|
1.2
|
1.6
|
1.9
|
Feb
|
0.7
|
0.4
|
1.6
|
1.6
|
6.2
|
0.5
|
0.3
|
0.2
|
0.8
|
0.2
|
3.0
|
2.3
|
Mar
|
0.9
|
0.5
|
1.5
|
1.5
|
5.5
|
0.7
|
0.5
|
0.8
|
2.0
|
0.2
|
4.2
|
3.1
|
Apr
|
0.6
|
0.7
|
0.6
|
0.6
|
-2.4
|
1.0
|
0.6
|
0.5
|
2.1
|
0.5
|
6.2
|
4.6
|
May
|
0.8
|
0.7
|
1.5
|
1.5
|
2.2
|
1.1
|
0.6
|
0.7
|
1.9
|
0.2
|
6.6
|
5.3
|
June
|
1.0
|
0.5
|
1.2
|
1.2
|
2.1
|
1.0
|
0.8
|
2.1
|
0.9
|
0.3
|
7.3
|
5.5
|
Producer Price Index Intermediate Demand of Goods (G) and Services (S) at Four Levels
|
L4
|
G
|
S
|
L3
|
G
|
S
|
L2
|
G
|
S
|
L1
|
G
|
S
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
June
|
0.5
|
0.5
|
0.7
|
1.7
|
3.7
|
0.1
|
1.8
|
4.7
|
0.2
|
1.8
|
3.1
|
0.5
|
July
|
0.8
|
0.8
|
0.7
|
1.1
|
2.1
|
0.2
|
0.8
|
1.1
|
0.7
|
1.5
|
2.8
|
-0.1
|
Aug
|
0.8
|
0.4
|
1.1
|
0.9
|
1.1
|
0.8
|
1.5
|
3.2
|
0.5
|
1.3
|
1.8
|
0.7
|
Sep
|
0.8
|
0.5
|
1.1
|
0.9
|
0.9
|
0.8
|
1.8
|
3.1
|
0.8
|
1.3
|
1.3
|
1.2
|
Oct
|
0.4
|
0.5
|
0.5
|
1.1
|
1.4
|
0.7
|
0.5
|
0.3
|
0.8
|
0.7
|
0.9
|
0.5
|
Nov
|
0.2
|
0.4
|
0.0
|
0.7
|
1.3
|
0.2
|
1.8
|
5.3
|
-0.4
|
1.1
|
2.3
|
-0.2
|
Dec
|
0.9
|
0.7
|
1.1
|
1.1
|
1.7
|
0.7
|
1.8
|
3.9
|
0.3
|
2.8
|
4.2
|
1.1
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Jan
|
1.4
|
1.5
|
1.3
|
1.8
|
1.9
|
1.5
|
2.6
|
4.9
|
0.9
|
1.7
|
2.3
|
1.2
|
Feb
|
0.8
|
1.5
|
0.3
|
2.2
|
4.2
|
0.5
|
5.4
|
12.4
|
0.2
|
1.6
|
3.1
|
0.2
|
Mar
|
1.3
|
1.9
|
0.6
|
2.0
|
3.9
|
0.4
|
0.9
|
1.5
|
0.3
|
2.2
|
3.8
|
0.6
|
Apr
|
1.0
|
1.6
|
0.5
|
2.7
|
4.3
|
1.1
|
-2.1
|
-5.7
|
1.1
|
1.1
|
1.5
|
0.9
|
May
|
1.5
|
2.4
|
0.8
|
2.1
|
3.6
|
0.7
|
3.1
|
6.3
|
0.4
|
2.6
|
4.0
|
1.4
|
June
|
1.1
|
1.5
|
0.6
|
2.1
|
2.4
|
1.6
|
2.1
|
3.2
|
1.1
|
1.6
|
1.6
|
1.7
|
Services and Construction Sector Industries in the Producer Price Index with SIC or NAICS Codes
Wireless telecommunications …………. 4812 July 1999
Telephone communications, except
radio telephone …………………………. 4813 July 1995
Television broadcasting ……………….. 4833 July 2002
Grocery stores ………………………….. 5411 July 2000
Meat and fish (seafood) markets ……... 5421 July 2000
Fruit and vegetable markets …………... 5431 July 2000
Candy, nuts, and confectionery stores … 5441 July 2000
Retail bakeries ………………………….. 5461 July 2000
Miscellaneous food stores …………….. 5499 July 2000
New car dealers ………………………… 5511 July 2000
Gasoline service stations ……………… 5541 January 2002
Boat dealers …………………………….. 5551 January 2002
Recreational vehicle dealers ………….. 5561 January 2002
Miscellaneous retail ……………………. 59 January 2001
Security brokers, dealers, and
investment bankers …………………….. 6211 January 2001
Investment advice……………………… 6282 January 2003
Life insurance carriers …………………. 6311 January 1999
Property and casualty insurance ……… 6331 July 1998
Insurance agencies and brokerages …. 6412 January 2003
Operators and lessors of nonresidential
buildings …………………………………. 6512 January 1996
Real estate agents and managers ……. 6531 January 1996
Prepackaged software …………………. 7372 January 1998
Data processing services ……………… 7374 January 2002
Home health care services ……………. 8082 January 1997
Legal services …………………………... 8111 January 1997
Engineering design, analysis, and
consulting services …………………….. 8711 January 1997
Architectural design, analysis, and
consulting services ……………………... 8712 January 1997
Premiums for property and casualty
insurance ………………………………... 9331 July 1998
New Industrial building construction .. 236211 January 2008
New warehouse building construction .. 236221 July 2005
New school construction ………………. 236222 July 2006
New office construction ………………. 236223 January 2007
New health care building construction..236224 January 2013
Concrete contractors, nonresidential
building work ……………………………. 23811X July 2008
|
Roofing contractors, nonresidential
building work ……………………………. 23816X July 2008
Electrical contractors, nonresidential
building work ……………………………. 23821X July 2008
Plumbing / HVAC contractors,
nonresidential building work ..…………. 23822X July 2008
Merchant wholesalers, durable goods .. 423 July 2005
Merchant wholesalers, nondurable
goods …………………………………….. 424 July 2005
Electronics and appliance stores ……... 443 January 2004
Building material and garden equipment
and supplies dealers…………………….. 444 January 2004
Sporting goods, hobby, book, and
music stores ……………………………... 451 January 2004
General merchandise stores ………….. 452 January 2004
Miscellaneous store retailers ………….. 453 January 2004
Internet service providers ………………. 518111 July 2005
Internet publishing and web search
portals ………………..………………... 519130 January 2010
Commercial banking …………………. 522110 January 2005
Savings institutions ………………….. 522120 January 2005
Direct health and medical insurance
carriers …………………………………… 524114 July 2004
Construction, mining, and forestry
machinery and equipment rental and
leasing …………………………………. 532412 January 2005
Management consulting services …... 541610 January 2007
Security guards and patrol services …... 561612 July 2005
Offices of dentists …………………….. 621210 January 2011
Blood and organ banks ……………… 621991 January 2007
Amusement and theme parks …………. 713110 July 2006
Golf courses and country clubs ……….. 713910 July 2006
Fitness and recreational sports centers . 713940 July 2005
Commercial machinery repair and
maintenance……………………………... 811310 July 2007
|
Conclusion:
The Producer Price Index keeps a tab on the rise and fall in the cost of production. It has risen at a greater speed than usual in recent times because of difficulties with international supply chains and higher prices of commodities. There is also upward pressure on the wages due to complexities in getting skilled workers.
