'Something else going on': Analyst highlights data showing Trump policies driving up costs
Businesses are paying more for the products they need, according to a new government report, and those costs could soon make their way downstream to American consumers.
The latest Producer Price Index shows producers and manufacturers paid 0.9 percent more last month compared to June, raising the annual rate to 3.3 percent, according to Bureau of Labor Statistics data, and stock futures dipped after the numbers were released, reported CNN.
"This report just out showing that the prices that businesses pay has heated up, so you're looking at a year-over-year change of 3.3 percent," said business correspondent Vanessa Yurkevich. "The estimate was an acceleration to 2.9 percent, so obviously above that, and then on the monthly basis the estimate, what people expected was 0.2 percent, that's coming in at 0.9 percent – so quite a bit higher than what was expected. We are seeing increases both on the goods and services side, so the products and then the services like airfares or hotels, all of those categories on the rise, and you can see that uptick just right there in the month of July, spiking up after kind of a volatile recovery after those pandemic highs."
"Key things to look at in goods: We saw the price of food, the price that businesses are paying for food, up 1.4 percent, and look at this," Yurkevich continued. "This is interesting: Fresh and dry fruits and vegetables, kind of a category that is interesting to look at because we import a lot of vegetables, but not from countries that are heavily tariffed. So there's something else going on, but this accounted for a quarter of the increase of all goods. This could be because of labor issues with immigration, it could be weather, it could be transportation costs, which also rose in the month of July, and then on the services category, you saw transportation and warehousing really increasing their trade services. These are the margins that businesses take in, those actually grew, and that is because maybe they're passing more of their costs down to the consumer."
"Then, finally, in terms of travel and accommodations on the rise again, so you're seeing hotels up 3.1 percent," she added. "But if you see there, look at that dramatic increase from the month of June when we saw levels that really we haven't seen in a while in July now, indicating a huge spike. The reason we look at this report in particular is because ultimately businesses will have to make a decision. Do they pass this down to the consumer? Clearly they're paying more, and does that end up with all of us, and what do they do?"
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