Even in Services, the Wholesale Price-Spike Is Now Relentlessly Red-Hot

Heading toward the consumer’s wallet.

By Wolf Richter for WOLF STREET.

Prices of goods and services that consumer-facing companies are paying – and that they’re then trying to pass on to consumers – jumped by 1.0% in January from December, seasonally adjusted, and by 1.1% not seasonally adjusted, according to the Producer Price Index for Final Demand, released by the Bureau of Labor Statistics today. Prices for goods jumped 1.3% for the month, and prices for services jumped 0.7%.

These input prices for consumer-facing companies have now bounced back to the top of the range of the red-hot producer-price inflation that began a year ago:

Compared to January last year, the PPI Final Demand jumped by 9.8%, now for the third months in a row in the 10% range (chart below, red line).

Without the volatile food and energy prices, the “Core” PPI Final Demand, jumped by 8.4% from a year ago, neck-to-neck with the record in the data going back to 2010, which was last in December at 8.5%. This is a sign that producers are now facing soaring costs beyond the volatile food and energy components (green line).

And just to see the relentless cumulative effects of this red-hot PPI inflation, here is the actual index in terms of index value for PPI (red) and Core PPI (green), not in percent change. Note the massive increase that started in mid-2020:

Producer price inflation has now seriously spread into services, with the PPI services jumping by 0.7% in January from December, same pace as in the prior month, but not driven this time by the usual suspects of transportation and warehouse services, which remained flat for the month, but by other services whose prices combined spiked by 0.9%.

Some examples of these other services that had red-hot price increases (with percentage increase in January from December):

  • Construction services (+3.6%)
  • Retailing of apparel, jewelry, footwear, and accessories (+4.2%)
  • Hospital outpatient care prices (+1.6%)
  • Dental care (+1.8%)
  • Machinery and vehicle wholesaling (+4.3%)
  • Traveler accommodation services (5.4%)
  • Portfolio management (+1.9%)

Some other services prices declined month-to-month, after having shot higher in prior months, as inflation jumps from category to category.

This brought the year-over-year increase for the PPI Services to 7.8%, the second worst in the data, after the 8.1% spike in December, and the second month in a row in the 8% range, more than quadruple the pre-pandemic average of 1.8%:

What we’re now seeing is that inflation further up in the pipeline – meaning cost increases for companies that sell to other companies – are hovering in the same red-hot territory for the third month in a row. In some categories, prices remained flat for the month or ticked down, while in others prices shot higher, in the now popular game of inflation Whac-A-Mole. And this inflation has spread far from raw materials and encompasses services.

Over the next few months, companies will pass on these increased costs to consumers, and maybe plus some, now that they can. Many companies have touted their ability to do just that, passing on those higher costs plus some to consumers, as consumers are still willing, and in many cases eager, to pay the higher prices before they go even higher, in a sign that the inflationary mindset has gotten solidly entrenched with companies and consumers alike, which allows inflation to thrive.

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  120 comments for “Even in Services, the Wholesale Price-Spike Is Now Relentlessly Red-Hot

  1. Publius says:

    Thanks for the great charts! Could you add vertical lines representing shifts in Fed jawboning? Surely there would be noticeable downward trends shortly after these time points.

    • Wisdom Seeker says:

      Why would Fed jawboning influence services providers to cut prices or defer increases? The Fed only has direct influence over interest rates.

      And the Fed hasn’t acted yet, for months, and is only talking about acting so slowly this year that the rate changes won’t even be measurable on the earnings report (since most debt won’t roll over and that which does only changes rates by ~1%).

      If I was a business owner I’d be setting prices as high as I could get away with, for as long as I could. “Get while the getting’s good!”

      Besides, more revenue this year helps to buy down debt and avoid the heartache of refinancing at higher Fed rates next year.

      • Anthony A. says:

        “If I was a business owner I’d be setting prices as high as I could get away with, for as long as I could. “Get while the getting’s good!””

        Clearly that’s what is going on in some retail shops. When I see a grocery item go up in price 50% overnight, that’s what is happening.

  2. Mike T. says:

    Real world example of inflation here in the Northeast I just got 4 new tires on my car yesterday. Tire price was 40% higher than last year! $800 on the car….who knows in 6 months time maybe $1,000 on the car!

  3. Nemo 300 BLK says:

    The metal quart and gallon cans we put our products up in only went up 68.5% on January 1st.

    It’s transitory, right?

  4. Harry Houndstooth says:

    Looks like we might get a 500 basis point increase in short term rates in March. Maybe the Fed will sell some bonds instead of just letting them mature. We might need some shock and awe to get this under control.

    • Depth Charge says:

      Surely you jest. The FED has absolutely zero intention of any sort of meaningful attempt to get ahead of inflation.

      • historicus says:

        It is manifest the Fed is lax, and complicit in this inflation.

        Trimming the stimulus is a far cry from removing the stimulus.
        Powell apparently wants to do things in the dark…..slowly trim QE, slowly let short term debt roll off the balance sheet..
        BUT COME ON MAN!
        Inflation 1% in a month and they are hand wringing over 1/2pt …maybe next month.
        Fed Funds should be tied to inflation
        Money supply should be tied to GDP demand
        This insider game decided on the whims of the unelected is absurd, and will be revealed as such to a vast segment of the citizenry.

        • Brant Lee says:

          No, the elected put their unelected cronies in place to do their real agenda. Same difference.

    • Mark says:

      Ha ( I think you meant 50 basis points).

      Funny thing – at least 500 basis points is actually necessary here – And that’s only addressing the tip of the iceberg of the disaster these clowns
      have wrought on America

  5. I didn’t see much inflation in groceries in Nevada until around February 1st. It seems like from one month to the next prices jumped 25%. Various items I look at like bread, soap, fruit, meat products, dairy products, all seemed to simultaneously jump higher. The Dollar Tree finally implemented their 25% price increase, too, so everything is $1.25 now. Up until now, I have been mostly reading about inflation, so this was overdue.

    • Flea says:

      Dollar tree won’t survive ,Aldi is cheaper and grocery store sales are lower priced

  6. 2banana says:

    How long can this last without wage inflation?

    Yes, burger flippers and wall street bankers got a big raise.

    Not so much for the rest of the working/middle class.

    “Many companies have touted their ability to do just that, passing on those higher costs plus some to consumers, as consumers are still willing, and in many cases eager, to pay the higher prices before they go even higher…”

    • georgist says:

      Sad times. Either we inflate and fixed income boomers get a taste of the pain or we raise rates and their “nest egg” falls in value.

      No avocado today for me. Solidarity!

      • Flea says:

        They’ve been screwing senior citizen for years,my aunt and uncle were complaining 25 years ago about it and I’m in middle sixtes

      • The Real Tony says:

        You mean raise rates and their next egg gains greatly in value.

      • Old school says:

        Once bond and stock bubble hit 1 in a hundred year valuations and cash yields negative 7.5% you might as well start stacking some precious metals.

    • Augustus Frost says:

      I’ve already read that burger flippers are on the list to be automated out of a job. Not sure on the progress though.

      Either way, the majority of Americans are destined to become poorer or a lot poorer in the future.

      Much or most of Wall Street too once the mania ends.

    • Troy says:

      Very true!

      Friends in the middle class are getting 2-4% raises raises. No way wage inflation is keeping up with price inflation in most markets

    • Coffee says:

      I just love how higher prices are blamed on the $0.50 pay raise workers received, yet no mention of the $20M dollar bonuses lavished on the CEO’s of the same companies.

  7. DawnsEarlyLight says:

    We better hope the BLS data is cr@p, or the Fed better stop jawboning, and get with the rate increases and liquidity pulls NOW!

    • Depth Charge says:

      The FED is extremely comfortable and happy with what’s going on. It was what they wanted. They stood up in front of the cameras and announced they were going to “let inflation run hot,” and that’s what they did. These guys go home to their mansions and enjoy life. They’ve got their tee times at the local country club every weekend. They are not the least bit concerned about anything.

      • Mark says:

        Mama, she keeps them unprepared
        To meet the enemy
        That’s comin’ unto us
        Teach them that evil dwells across the sea
        Lives in a mountain
        Like they see on TV
        Down in the heart of town
        The Devil dresses up
        He keeps his nails clean
        Did you think he’d be a boogeyman?

        Buffy Sainte Marie

      • historicus says:

        “It was what they wanted.”
        That is the only conclusion that can logically be drawn from the inaction of the Fed.
        And those WHO KNOW the Fed will drag their feet, not step up and put out the fire….THEY will make big chunks of wealth as others wait for the Fed to stand to their post and do their duty. The later group relies on honesty, fiduciary responsibility, and adherence to oath of office.
        How foolish it is proving to be.

      • AK says:

        I think Federal Reserve is waiting to see what happens to inflation after pandemic finally subsides, and market mechanisms have a chance to work against inflation. There is a decent chance that inflation will go down, although probably not all the way down to their 2% “comfort zone”. Hopefully we will have more clarity about the course of inflation some time in the second half of this year.

        • Pete Koziar says:

          Inflation in producer prices take a very long time to work through the system. I doubt we’ll see this storm pass anytime in the next 12 months, more likely, much longer.

        • The Real Tony says:

          They’ll lie about inflation coming into the midterm elections and then hyperinflation will grip America in 2023. The U.S. dollar will fall off a cliff later in 2023.

        • DawnsEarlyLight says:

          “…I think Federal Reserve is waiting to see what happens to inflation after pandemic finally subsides,”…

          Another bunch of BS data.

        • This is evidence of structural inflation, transitory or not. Evidently the goods and services we used to buy from overseas are not arriving. Before America can rebuild its supply chain there is a whole lotta work to do, (and blowing up the infrastructure package took us in the wrong direction) Not enough labor to supply Americans with American goods, China still in (credit) lockdown, and not enough US govt spending (while the Fed shrinks corporate credit -mistake). Outlaw share buybacks and give tax breaks for investment.

        • Old school says:

          Inflation is bad, but real concern is problems government caused to real economy by Pandemic policy. No need to kill small brick and mortar or to fire workers because they are not taking a shot. Trudeau could have reached a compromise with truckers instead of heavy hand like a dictator. Very disruptive to real economy once you threaten workers

        • Nathan Dumbrowski says:

          Prices are not coming down. Where we are going a dollar won’t even buy a pack of bubble gum. And guess where the prices go from there. UP. Buckle up and go on purchasing strike while trying to earn as much side hustle as possible possibly taking a second job


      • Flea says:

        These idiots at top of food chain ,have no idea how to survive in a real world experience,simple things like cooking food grocery shopping .mowing grass there day is coming

    • DawnsEarlyLight says:

      Stop protecting the damn stock market!

    • w.c.l. says:

      Yer kidding, right? As I posted earlier, I have no faith in this Fed. Even if they do start to tighten and raise rates, once the stock and housing markets start to tank and revert, they’ll start catching hell from the “I got mine” crowd, go full fetal position and back off. We’ll then have the worst of both worlds where inflation still runs hot and nobody takes the Fed’s word on anything anymore. (as if they do now)

      • Swamp Creature says:


        That’s what I predict will happen. As Blinkfien, former CEO of Golman Sucks said, there is no appetite for deflation anywhere. Once that starts to kick in we’ll be back to Inflation as the lessor of the evils and more politically palatable.

        • w.c.l. says:

          I hope I’m wrong and the Fed makes the markets’ take their medicine. We’re going to have get off this financial addiction to low rates and the damage it’s causing. It’s not going to be pretty but the present course is even worse.

  8. michael says:

    That is going to leave a mark. Good luck Jerome.

    • John H. says:

      “…going to leave a mark.”

      Thanks for that post…. Haven’t heard an All-Star Wrestling reference in ages!!

  9. tagetracy says:

    Unlike during previous financial challenges (e.g., credit markets freezing up during the initial phases of Covid), the Fed can’t jawbone their way out of this one. The reason is simple. When the Fed made reference to stepping in and potentially buying corporate and junk bonds about two years ago (to help stabilize these markets), their audience was the financial community, a group of people highly dependent on the Fed for their livelihood. So it was much easier to feed a group of blood sucking finance people with a bunch of BS to trade on. In the end, the Fed never really made much of a dent in these markets as all’s they had to do with jawbone their finite target audience.

    The problem now is that inflation is a very real, large, and dangerous problem that is impacting a much wider audience that barely understands what a bank does, let alone the Fed. As such, the only message the people are seeing and understanding is that prices are on the verge of being out of control with very few if any of the masses of people giving a rat’s ass about what the Fed says or promises to do.

    The Fed cannot jawbone this problem away, not a problem that involves taking their balance sheet from $1 trillion at the start of the Great Recession to roughly $9 trillion today. This is very real and needs to be addressed very quickly and will involve significant reductions in the balance sheet to drain excess liquidity/cash from the economy. No question pain is going to be felt but if they fail to act and begin to tackle inflation, then they run the risk of losing all credibility (as if they have much left with the parties on this site).

    If you think the Fed has had to deal with political pressure in the past, think again as when the majority of the population begins to hammer their members of Congress about the cost of living truly stripping them of what purchasing power they have left, then you will see a rare but most likely united front from Congress demanding to see “heads roll”.

  10. Michael Engel says:

    PPI : gate to heaven, u don’t want to rush.

  11. Kunal says:

    If anyone thinks Fed wants to rein in inflation, they are delusional. Its all part of the plan, create inflation, print money, raise asset prices, and help rich reach new levels of prosperity. Everything is going as planned by Jerome Powell’s masters.

    • Augustus Frost says:

      The “plan” doesn’t include destroying the FX value of the USD. It’s the basis of the FRB’s power and funds the empire.

      Without the USD as global reserve currency, the FRB loses much of its power. This will happen eventually, but they have no motive to self-destruct voluntarily. Believing it is nuts.

      Even if your premise was true (which it isn’t), they don’t serve all 724 billionaires, much less the larger number of other .01%ers. Most of these people are destined to lose much or most of their fake wealth when the mania ends, just like anyone else who holds into a crushing bear market. In the past, that’s what happened after every mania ended.

      • Kunal says:

        If you have missed it, all central banks of the empire are doing it together.
        Those who don’t don’t matter or will be sanctioned into oblivion.

        • Flea says:

          Will eventually be a global crypto currency run by world bank or imf

        • AK says:

          We will see about sanctioning China or Russia into oblivion. Or the rest of the world for that matter. IMHO the USD is the last prop of the empire still standing (I think strength of US military is due to oversized milirary budget, which is conditional on USD reserve status). I agree with Augustus Frost that Federal Reserve will priorities (or, rather, will be forced to do so by US government) USD reserve status over anything else.

          IMHO their priorities will be USD reserve status (top), then real estate market, then stock market (lowest). I have no idea how they will do that, but this assignment of priorities seems logical to me.

        • Flea says:

          Am they are no longer going to be sanctioned to death ,fighting back Russia -China started there own settlement system ,will force most of s.e. Asia to join followed by Europe or no natural gas = new world order

      • Cashboy says:

        Augustus Frost;
        All Central Banks are doing the same so the FX value of the USD will remain the same against other currencies.

  12. Michael Gorback says:

    The Fed is indifferent to inflation. It’s a private company owned by a handful of huge banks. Figure out what’s best for the big banks and you’ll know what to expect from the Fed.

    Whatever they do, it won’t avoid the long-overdue massive unwind.

  13. Hal says:

    I clicked on an ad for Jets.com next to the article. Apparently, THAT SERVICE is going up so fast that they can’t even tell you what it costs. You have to ask (uh, no, I didn’t).

  14. Depth Charge says:

    Has there ever, in history, been so much talk about inflation yet so little action to stop it? It would be comical if it weren’t so harmful to human beings who need food, shelter and transportation to survive. But, for the sake of all that’s holy, we wouldn’t want to “upset the stock markets.” That would be sacrilegious. Where in the FED’s mandate does it say their job is to pump up stocks and juice asset prices to make the rich even richer?

    • Jackson Y says:

      Not since Arthur Burns in the 1970s. And even then, he raised interest rates to levels that would be considered outrageous today. The difference was Burns was under extreme political pressure from Pres. Nixon to keep rates low, while moderate Democrats are explicitly calling on Powell to act on inflation because they’re afraid of a midterm wipeout.

      And never has the Fraud Reserve been so open about the fact they work for Wall St & their personal investment portfolios, instead of the American people. I wonder why lawmakers are not calling them out for it.

      • COWG says:

        Because Powell can wipe them out with a 5 minute press conference…

        I’ve always said “ you might can beat me up physically, but I can wipe you out economically “…

        Your pain will last a whole lot longer than mine…

        • Jackson Y says:

          There’s a limit to how much Federal Reserve “hawkishness” (which doesn’t even come close so far) can tank stock markets if the underlying economy & corporate earnings remain strong, as they are now.

          There’s a reason sustained 20%+ bear markets almost never happen outside of recessions. The problem is central bankers have gotten so greedy, short-sighted & ethically challenged, even a 10% correction is too much for them.

        • COWG says:

          Jackson Y,

          I don’t disagree….

          All I can do is refer you to a few articles back where Wolf documents previous high fliers and SPAC whacks…

          I’m of the the opinion a recession is already here swimming like a big whale under the surface of the ocean… it just hasn’t broached yet…

          I’m just trying to stay out of the big splash….

  15. random guy 62 says:

    Been doing almost constant price adjustments for the past year on our product line of heavy truck components. Normally we adjust prices 2-4% every one or two years.

    As of today, the price of our most popular model is up 44% since January 2020.

    The price of our “loss leader” model (less value-add, so is more directly impacted by commodity prices) is up 61% in the same time frame!

    Everything has gone up. The increases have slowed, but not stopped.

  16. ru82 says:

    Even if interest rates do go up some that may pause the home price increases, I just ready the rising cost of lumber has added $19k onto the price of a home.

    After falling back sharply from a record high in May of last year, lumber prices began climbing again in December. They are now about 22% lower than that peak, but still about three times their average pre-pandemic price, according to Random Lengths.

    That is adding to the cost of both building a new home and remodeling an older one. The National Association of Home Builders estimated the recent price jump added more than $18,600 to the price of a newly built home. It also added nearly $7,300 to the cost of the average new multifamily home, which translates into households paying $67 a month more to rent a new apartment.

    There are several reasons behind the inflation, but it’s mostly that sawmills can’t keep up with demand. Sawmill output dropped at the start of the pandemic and while it has recovered some, it is still plagued by labor shortages. Compared to the increase in housing starts, sawmill output is significantly behind.

    Other issues inflating lumber prices include ongoing supply chain disruptions, tariffs on Canadian lumber imports and an unusually strong wildfire season in the American West and in British Columbia.

    • Pilot Doc says:

      Those numbers are about right. We built one son a home 3 years ago. Building the other one a home now. The lumber package is 2.5x higher.

  17. wulfgartheberserker says:

    In the news today – since the Fed announced reducing the purchase of debt securities in early November/2021 it has actually added ‘$332 billion’ to the balance sheet (in 3 months). And you wonder why we have high inflation?

    • Wolf Richter says:


      Over the past 8 weeks since Dec 22 — which is what matters because the tapering was small at first and took a while to get going — the Fed added $88 billion in two months.

      Over the past 3 weeks, which reflects the sped-up taper, the Fed has added just $11 billion.

  18. Aaron says:

    Search for St Louis Fed M2 or M3. Although perhaps not a perfect fit for money supply, they are more than accurate to get a basic picture of their growth.

    The expansion of the money supply has already happened in a magnificent and substantial way. Now that it is beginning to show up in measurements like the CPI and PPI should be no shock to most.

    I try and remember that not everything that counts can be measured, and not everything that is measured counts.

    Sure, the Fed can raise rates. They can also raise them wherever they want. However, there are consequences. Nearly all they have done the last 30+ years has been to stop a substantial contraction in credit and hence money supply. Every time, every time, their response has gotten progressively more bold. Moreover, its success before confidence erodes likely becomes more doubtful.

    The older I get, the more I realize the less I know. Nonetheless, I’m confident that at least some Fed members understand how close the monetary system was to imploding in the past. Bush II and Henry Paulson seemed to get it, and that was 2008 and trillions of Fed reserve notes ago (debt and credit).

    If they tighten credit again to that critical-mass point, like Henry Paulson didn’t say, they’re gonna need a much bigger bazooka.

  19. DR DOOM says:

    In Feb 2021 Powell said exploding the money supply did not cause inflation. He said in effect that Milton Friedman and Monetary Policy is dead. While he was spouting that base-less bull shit the Exchange Equation ( Friedman had it on his Calif. car tags)’was predicting 6 to 9% inflation in Feb 2022. He was not challenged after he spouted that bull-shit. Powell is a lawyer/ investment banker from Wall Street. He has bought over a year with his bull-shit. Why should he stop now? Only a corrupt Gov’t would allow him to directly benefit from his policy decisions. All one can do is limit the impact of this corrupt Gov’t by not having debt. Saving and not having debt is all I have control of. Safely keeping up with inflation is dead. Ain’t going to happen. Play the Casino if you are loaded. If you are not and play Powell or his replacement and Gov’t will let Wall and Broad take you to the cleaners and the Govt will help and they will split up the spoils. This debt ridden,non-productive,bomb-dropping republic has shot its wad.

    • phleep says:

      Money supply, money supply, money supply. All these other causes would straighten themselves out if they were chasing scarce, sound money.

    • Gen Z says:

      Tangerine Bank in Canada offers a 1% starter mortgage while paying savers a whooping 0.10% on high interest savings. Somebody is getting scammed.

    • historicus says:

      The Fed is QUICK to save the Markets

      The Fed is SLOW to deal with Inflation

      The citizens of the country are a distant concern for the Fed, what could be cleared.

  20. phleep says:

    Stopped buying haircuts in 2008 (a $20 trimmer and a small learning curve is all I laid out, ever since). That defines my whole ethos. It has been so long since I threw any money around, I don’t remember it, or any of its pleasant, transitory thrills. We’ll see who and what turn out to be transitory.

    • Hal says:

      I’ve had FlowBee (as seen on TV) for 25 years. I don’t even remember what a barbershop looks like. Nor do I wish to.

      • Xavier Caveat says:

        I’ve been doing my own haircuts and dentistry since 2012. Sure there’s a few gouge marks inside my mouth from the learning curve, but it isn’t like anybody can see them, and think of all the money I saved!

        • DawnsEarlyLight says:

          LoL, don’t get too thrifty on your eye-wear!

        • Red says:

          Same. I do my own surgeries now. Sure I lost a few limbs but I’m getting better.

        • historicus says:

          Taking out the appendix wasnt so tough.
          Now that I know how, anybody need help?

        • Anthony A. says:

          I just did my own hip replacement and my golf game improved. Developing my own x-rays too!

    • Gen Z says:

      A trimmer is good for a buzzcut, but for those fades that gets the girls wild, we got to pay C$50+ for a barber for those fades. Hard to do it with standard combs on the clippers.
      I chose the buzzcut.

      • DR DOOM says:

        As a boomer I like your thinking Gen Z. The girls may like the fades but I would bet a lady might like the buzz. Keep the money and a conversation upgrade to boot.

  21. gorbachev says:

    Had a minor backup in our house recently.No material used
    one man, 3 hours $600.Yikes.

    • DR DOOM says:

      I just replaced all my 4in copper and 1 1/2 in copper lateral drains. Toilets and bathroom sinks copper verticals kept and were transitioned to sch 40 PVC using Fernco’s. I have a full basement so it was overhead work. I got a quote to include my new sink and dishwasher plumbing up stairs . I had CPVC and Sch 40 PVC replacement pipe quoted not copper. $5500 ! was the quote. I did it myself . Took 3 days because I fiddle fart around a lot. I had all kinds of pipe I scrounged over the years in the barn. I used (5) 4in sch 40 couplings to join odd lengths for my longest run. Kinda weird thing to look at if you are a plumber. I spent about $300 for fittings, glue,cleaner, etc. Those that can will do and those that can’t will learn because they must.

  22. Gen Z says:

    A tray of eggs in Toronto was $2.27 a year ago, now it’s $3.17. Social assistance rates haven’t increased since 2018. Security guards are watching those trays of eggs like a hawk watching the eggs of birds in a nest to feast on.

    • The Real Tony says:

      Walmart has hiked the price of virtually everything . The other grocery stores in Canada to a lesser extent. One kilogram bags of M&M’s haven’t gone up in price in the last 4 years at Walmart.

      • Gen Z says:

        Sugary foods are always on sale for some reason. Maybe good for the insulin companies.

      • Anthony A. says:

        Walmart brand yogurt in a 4 pack of 6 ounce cups went from $1.24 to $1.82 this month.

    • Old school says:

      Eggs have been 65¢ a dozen where I shop (Aldi’s) for about 6 months. Just went up today. I guess it’s some kind of loss leader.

      • Gen Z says:

        One free range organic egg goes for 65 cents in Toronto. A tray of dozen is about C$10 these days.

        • JoeC100 says:

          My local free range organic eggs went up from $5.50 to $6.00 several months ago

      • DR DOOM says:

        I got 30 quarts of pickled eggs in beet juice. I eat one every evening with peanut butter and homemade apple butter and a strong cup of black tea after my walk. I got the pickled eggs and 20 jars of apple butter from a hillbilly realitive for some lathe work turning bearing housings for an obsolete wood guide stationary feed for his hillbilly engineered log splitters for fire wood. I worked all day to turn the PVC housings and to bore them on a 75 year old turret mill. This was all worthless work realitive to our debt powered fiat economy. He’s happy,I am happy. Fed and Wall Street got nothing and they don’t give a shit anyway. F’em all.

  23. DawnsEarlyLight says:

    Are products selling prices the same, regardless of how much it originally cost the seller, or are sellers just increasing prices to take advantage of the consumer? Like in FIFO?

  24. Jackson Y says:

    A lot of this inflation isn’t even measurable. For example, the average quality of customer service has gone down the toilet in the last 2 years. Many call centers outsourced to places like the Philippines. Fast food places making your orders wrong & when you confront them they DGAF.

    • georgist says:

      Trainers and jeans are now basically subscription services as both wear through in no time.

      Can openers that are nearly single use, even if you buy a more expensive one.

      • TheRealMRDyno says:

        About 4 years ago I bought a pile of Levi’s when Sears was closing for $25/ea.

        About 3 years ago I bought some jeans at Walmart for $10 and $15 each, just until I lost (lose) some weight.

        So far I can’t tell any difference between the three kinds.

  25. David Hall says:

    The value of the new SUV I bought in January is rising. The value of the land I bought last year is slightly elevated. Some people do not sell real estate, their children inherit it. The everything bubble now seems like prices were cheap in the good old days.

    California is in the worse drought of 800 years. Little rain in the past six weeks, opposite of the “Grapes of Wrath.” Californians moved to Oklahoma.

    • jon says:

      Have patience, everything would revert back to mean in due time.
      I have seen this movie before :-)

      • David Hall says:

        In 1989 I hitchhiked to Phoenix to buy a new Toyota 1/2 ton pickup truck with money my parents sent me. It cost about $7500. Prices go up more days than they go down.

      • Alku says:

        most often sequels are way worse :)

  26. WolfGoat says:

    Core Inflation over 8%, 10 year Treasury hitting 2.05% with a 5 basis point rise, stock market Dow up 1.2%, S&P up 1.5% and NASDAQ up 2.5%… the party continues!

    What’s everyone worried about?

    • Old school says:

      It looks like high tide and it’s just starting to go out. Wonder who not wearing their trunks?

    • DawnsEarlyLight says:

      My CC limit went up, but the Rewards payback percentages went down. Next step? The interest rate will go up!

      • historicus says:

        Dont worry, Hedge Funds can dig into the Fed money pot at rates down around 2%.
        And the Powell said he was lowering rates for Main Street.

  27. WolfGoat says:

    5 & 10’s getting flat within 11 basis points. Maybe this next inverted yield curve will end up a bit differently from the last one!

    • Jackson Y says:

      Then they should sell treasuries from their bloated $9T balance sheet to force yields higher, not chicken out because “OH NOEZ YIELD CURVE WILL INVERT”

    • historicus says:

      The inverted yield curve will be “inverted”.
      Normalcy is the FED out of the LONG END

  28. georgist says:

    So interestingly Canada, which is in an even bigger debt hole when it comes to housing, is trying to squash wage inflation differently.

    Trudeau announced that they will go for record immigration through to 2024 inclusive.

    The USA is trying to stop wages going up by raising rates, to cut off jobs.

    Canada are trying to squash the wage spiral by adding immigrants.

    I’m not sure the latter will work as genuinely skilled immigrants won’t come due to insane housing costs. But they are compelled to try as raising rates isn’t an option, the housing “market” will implode. Adding more immigrants will also shore up prices by putting pressure on housing stock.

    What an absolute joke.

    • Gen Z says:

      Many of the new immigrants are “international students” who live a dozen to a room inside a basement owned by a Liberal Boomer who votes for Trudeau to boost real estate, and voting for Conservatives to bust the unions.

  29. Boomer says:

    Some Bay Area Peninsula Starbucks closed due to lack of labor. Have we reached the point there is nobody left to do these lower tier jobs in wealthy enclaves at any pay level? Used to be cheap labor drove from Fremont and Milpitas for low level wage jobs in Palo Alto. Years later it was Manteca. Who can commute for any of these jobs in Silicon Valley? Anyone with any degree of intelligence will uproot from California for much somewhere with much better affordability.

    • Old School says:

      Very similar situation in rural NC. A lot of jobs going unfilled and companies working hard to automate to deal with it.

  30. historicus says:

    If this inflation gets worse, I think people will start to just give up.

    The Fed has no connection with reality. This inflation that they seem to enjoy is killing people.

    There were no lumber yards or shovels at Georgetown Prep. (Powell’s prep school)

    The Gen x, y and z’s will someday see that their future wealth was pulled forward to be used against them. Housing and reasonable entry into the stock market bid up and away…..by the use of this wealth ( 30 Trillion) pulled forward…their future used against them. Orwellian.
    They will have a right to revolt.

    • historicus says:

      The ability to SAVE one’s way to financial stability has been taken away by the Fed.
      Scrimp and Save? No, borrow and spend is the lessons of the Fed. Pump the GDP, dont be self reliant, dont save for a rainy and watch those savings back up 7.5% a year in real terms.
      This is the greatest theft in history….and no one is on to it….except a few posters here and elsewhere.

    • Gen Z says:

      I heard some Canadians tell me that going to jail is not a bad thing after all, and it’s easier because there is no death penalty, cops are not trigger happy and a man can identify as a woman to enter a female prison and vice versa for the sex.

  31. DR DOOM says:

    Looking at Treasury rates at close with 10yr at 2.05% and 5 yr at I.94% wolfs preceding post was spot on what that market was thinking.

    • Old School says:

      2/10 spread is an important one as well. If that inverts it’s automatic recession is my understanding.

      • Wolf Richter says:

        QE has destroyed the predictive qualities of the yield curve because the yield curve is the result of the Fed’s QE and no longer a market opinion. If the Fed sells outright $400 billion a month in bonds, the yield curve will steepen out the wazoo without predictive qualities.

  32. Swamp Creature says:

    A CNBC guest said today that with 7.5% Inflation anyone holding cash now was a loser. They were throwing their money away. With corporations making record profits the stock market was the only game in town, even in a rising interest rate environment. The CNBC female host concurred.

    • DR DOOM says:

      Swamp Creature. It would be pretty hard to sell advertising to watch a talking head yak about cash. Cash is boring and is for financial Luddites like me who don’t have cable and stream targeted content because I do not watch advertisements. I built a 1/4 wave dipole for over the air broadcast so I can watch Masterpiece Theater on NC. PBS . I live in the mountains of WNC and picking up a repeater is just plain luck. Is CNBC where Jim Bob Cramer lurks? Isn’t he the one who said Bear Stearns was fine and then they collapsed?

    • Wolf Richter says:

      So if you lose 20% in the stock market, you’re also losing 7.5% to inflation, for a total of 27.5% of your money thrown away, rather than just 7.5%. Anything can beat inflation if the price goes up. But that just may not be the case, and then you get double-whammied.

    • Old School says:

      Last time inflation got out of control a lowly 30 day t-bills outperfomed stocks and bonds for a very long time.

  33. DarkMatter says:

    I’m going to order a jawbone cocktail next time I’m out. From the comments here it seems the Fed loves it.

  34. Gabby Cat says:

    Didn’t the government have monopoly laws, anti-trust laws, and fleecing laws on the books? I thought big businesses were scared of the .gov. Now it seems like no one is looking to keep prices fair and support the middle class. Why? Why are we seeing big investment firms with admins on every board from ABC to Zillow? Why are they in office making laws? I can’t for the life of me understand why these laws are grossly overlooked.

  35. PJ Mason says:

    Would one of you financial wizards please tell me if savings rates are going to up with the other increasing rates.
    Or are we going to continue getting zero percent until all of our savings are gone.

    • Wolf Richter says:

      At some high-yield savings accounts, savings rates have already spiked to 0.50%, not 0.0%, hahahahahaha.

      But Treasury I-Bonds are now paying over 7% (worth checking out).

      1-year Treasury securities are at around 1.1%. Some CDs might be getting close to that. Six months from now, they might be at 2%.

      Shop around.

  36. Bam_Man says:

    This Federal Reserve deserves as much respect as the Banco Central de Venezuela.

    Venezuela current inflation rate = 686%
    Venezuela overnight interbank lending rate = 58.35%

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