Rising Wholesale Prices Indicate Growing Inflation

Danica Djokic Image
ByDanica Djokic
January 19,2022

In 2021, the prices of wholesale products rose by 9.7%, reflecting the highest consumer inflation in the last 40 years, as announced by the Labor Department on Thursday, January 13.

This near-10% growth represents “the largest calendar-year increase since data were first calculated in 2010,” the Bureau of Labor Statistics stated.

On the plus side, the producer price index (PPI) - a number marking the height of producer prices for goods and services - increased “just” 0.2% in December, though the estimation was 0.4%.

Another signifier of economic instability is the number of weekly claims for unemployment insurance. The first week of January has seen a significant surge, with a total of 230,000 cases. These figures are well above the expected 200,000 and much higher than the previous week’s 207,000.

However, in the long term, continued jobless claims fell by 194,000 to 1.56 million - the lowest level since June 1973 - as stated in a separate document by the Labor Department on Thursday. In other words, the current issues are better reflected by inflation than joblessness.

Wholesale markets (online or offline) are not the only ones affected, of course. The PPI figures show that the demand prices for energy fell by 3.3% and 0.6% for food. On the other hand, trade and warehousing demand costs hopped up by 0.8% and 1.7%, respectively. 

Goods and services showed opposing trends: While goods prices went down by 0.4%, services offset that reprieve by rising 0.5%.

Experts in the field agree that the future brings a tightening of the budget in 2022, while the increase in initial jobless claims is likely not the start of a trend.

No matter the predictions, the US labor market is still going through rough patches, with the total number of unemployed citizens back to its pre-pandemic level. While this is optimistic, it still leaves around 6.3 million people without jobs.

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As people continue to feel the effects of the pandemic, many small business owners are struggling to keep their businesses afloat. The US Congress is considering House Bill 3807 to help small businesses with a $42 billion relief package. Erika Polmar, the Independent Restaurant Coalition executive director, said this bill would be a "lifeline" for around 2,700 independent restaurants in Oregon that applied for relief last year but never received it. House Bill 3807 now has to pass the US Senate, and we’ve yet to see how much relief small businesses will actually receive. If this bill passes, it will provide much-needed relief to small businesses across the country. As Polmar said: "The future of our industry, the 216,000 jobs that restaurants and bars provide Oregonians, are in jeopardy if we don’t replenish this fund."  If voted in, House Bill 3807 would help the Restaurant Revitalization Fund and support many other businesses impacted by the pandemic. With this bill, small business owners could apply for grants to cover expenses such as payroll, rent, and utilities, letting them avoid getting unfavorable loans to keep their business running. This would be a massive relief for many small businesses that have been struggling to stay open during the pandemic. And although many of them are busy again, they are now facing serious problems with inflation. "All of those costs have skyrocketed. So, what you may have seen happening in 2019 as a really great banner night is now barely making ends meet," said Polmar. Dwayne Thomas, the president of the Live Events Coalition, commented on the bill, saying: "We’re just in debt up to the hilt trying to stay open and relevant as now we’re going back to work. We’re going back to work amid a worker shortage, amid all kinds of supply chain issues, and we’re going back to work quite quickly." He also said that the $13 billion would be allocated to different businesses and divided into three rounds. The first round of relief will go to those who lost 80% or more of their income within the past two years.
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