Inflationary pressure looms for the retail sector as the US Producer Price Index (PPI) doubles in a month, according to recent data from the US Bureau of Labor Statistics. In February, the PPI rose by 0.6 percent, effectively doubling from the 0.3 percent increase seen in January and the 0.1 percent decrease in December 2023. The PPI measures inflation from the perspective of the seller, in contrast to the Consumer Price Index (CPI), which gauges inflation from the point of view of the consumer.
The year-on-year increase in the final demand index for February was 1.6 percent, the largest year-on-year rise in PPI since September 2023. With retail sales also on the rise, as shown by the 0.8 percent increase recorded by the US Census Bureau for the same month, it is likely that these higher producer costs will be passed on to consumers.
The Bureau’s data already points to an increase in final demand prices, which rose by 0.3 percent in January. This comes after a slight decline of 0.1 percent in December, despite it being traditionally a more expensive month of the year.
Despite the potential for future rate cuts, consumers may see prices rising in the coming months as retailers grapple with persistent inflation fueled by the PPI.