Dec 15, 2021 - Economy

Producer prices rise at fastest pace on record

Data: FRED; Chart: Axios Visuals

An index of wholesale prices rose 9.6% compared to a year ago, its largest annual gain since the government began calculating in 2010.

The big picture: The Producer Price Index (PPI) started off the year showing 12-month price growth of 1.6% and has moved up steadily all year.

Why it matters: The PPI is a key leading indicator for the prices that consumers eventually pay.

  • "[December] should be the peak," wrote Pantheon Macroeconomics in a research note. "A combination of favorable base effects and smaller month-to-month increases should start to drive down the year-over-year rate."

State of play: On the whole, companies passed on enough of their input cost increases to customers during Q3 to preserve profit margins.

  • Watch for whether margins continue to hold up in Q4. The first round of earnings start rolling in next month.
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