Feeling the pinch of inflation? You’re not alone.
Wholesale prices jumped by a record-setting 9.6 percent last month over a year earlier. That has hit small businesses especially hard and prompted many of them to hike costs for consumers, who are already struggling under the weight of inflation levels not seen in decades.
The November wholesale price increase broke the previous record of 8.6 percent, set in September and October of this year. Wholesale price records date back to 2010, the Daily Mail reports.
Meanwhile, the U.S. producer price index, which gauges inflation before it hits consumers, rose 0.6 percent in October and 0.8 percent in November, the Labor Department announced Tuesday.
New Survey Finds the Most Small Businesses Raising Costs Since 1979
A new survey from the National Federation of Independent Business showed that the net percent of business owners raising prices has risen to 59 percent, the highest level seen since 1979, during the Carter Administration.
Price increases were 88 percent higher in wholesale, 75 percent higher in construction, and 66 percent higher in manufacturing.
After first denying and downplaying inflation, the Biden Administration has recently said that inflation is temporary. It called climbing prices “a bump in the road.”
“I think it’s the peak of the crisis,” President Biden said last week.
But Republicans have pointed to the Biden administration’s federal spending spree as a contributing factor to inflationary pressures. Republican National Committee Chairwoman Ronna McDaniel said Biden’s Build Back Better agenda, which would cost trillions of dollars, would make the problem worse.
“Biden and the Democrats want families and small businesses to foot the bill,” McDaniel told the Daily Mail.
Consumers do seem to be feeling the pain. Commerce Department data released today showed retail spending rose by an anemic 0.3 percent in November, falling short of the 0.8 percent increase economists had predicted.
Amid Rising Inflation, Federal Reserve Moves Toward Raising Interest Rates
On Wednesday, the Federal Reserve’s Federal Open Market Committee said it would cut back its bond purchases beginning now. And it will raise interest rates starting next year, per UPI. The Dow promptly rose 383 points at the news, although large bank stocks took a hit.
The Fed said it expects to raise interest rates three times next year to combat inflation. It plans to raise them further in 2023.
“We have to make sure that higher inflation doesn’t get entrenched. It’s one of the two main threats, the other being the pandemic, to getting back to maximum employment,” Federal Reserve Chair Jerome Powell told reporters, according to CNBC.
Meanwhile, the Fed has been spending roughly $120 billion per month on bond purchases to prop up markets since the pandemic first struck in the spring of last year. It will taper off those bond purchases by $30 billion per month, winding them down completely in March of next year.
“The economy no longer needs increasing amounts of policy support,” Powell said.