Bidenflation Sent Prices for Trucking, Freight Trains, Air Freight and Warehousing Soaring in April
It is getting much more expensive to transport and store goods around the United States, a signal that the economy may not yet have hit the peak of inflation.
The government on Thursday released the Producer Price Indexes (PPI) for April showing that “final demand” prices for transportation and warehousing jumped 3.7 percent compared with a month earlier. Compared with a year ago, prices in the sector are up 20.8 percent.
The skyrocketing prices for transportation also call into question the effectiveness of the policies of President Joe Biden and Secretary of Transportation Pete Buttigieg. President Biden said on Tuesday that fighting inflation was his top priority.
The PPIs contain data on prices for the full set of goods and services produced in the U.S.—including prices charged by businesses to other businesses, foreign customers, and government agencies—while the more familiar Consumer Price Index covers only prices paid by the U.S. household sector.
The data include information on “final demand” prices, which are sold the end-users of products and services, including households, businesses, government, and capital investment. They also include prices for different stages of “intermediate demand,” which track production through the supply chain.
Transportation costs are up no matter how things are shipped. Rail freight prices rose 2.6 percent in April and are up 9.7 percent from a year ago. Truck transportation prices jumped 5.1 percent in March and 4.4 percent in April. Compared with a year ago, they are up 27.4 percent. Prices for air freight rose 3.5 percent in April for a 12-month gain of 12.8. Shipping by waterways jumped 5.7 percent for an annual rise of 21.2 percent.
Truck trailer prices have skyrocketed. These rose 2.6 percent in April are are up 39.9 percent for the year. Diesel fuel prices rose 8.1 percent in April and are up a jaw-dropping 81.6 percent from a year ago.
Warehousing prices for goods jumped 4,5 percent in April and they are up 15.1 percent since the month a year prior.
The price hikes are similar throughout the chain of production and to all sorts of users. Prices of transportation and warehousing of goods for personal consumption rose 3.9 percent in April and are up 23.3 percent for the year. Capital goods transportation and warehousing prices climbed 4.2 percent month-to-month and 24.9 percent over the previous 12 months.
Worse Than Expected Again: Producer Prices Up 11%
Prices charged by U.S. businesses were up 11 percent in April compared with a year ago, the fifth straight month of the government’s producer price inflation gauge running at or above 10 percent.
The Department of Labor said Thursday that its Producer Price Index for final demand rose 0.5 percent in April compared with a month earlier, in line with expectations. But there the results for earlier months were revised up, bringing the 12-month figure above economists’ expectations for a 10.7 percent rise.
The report for March was revised up to show a 1.6 percent gain from February and the February report was revised up from a 0.9 percent gain to 1.1 percent. This indicates that inflation has been running even hotter than the earlier reports indicated.
The index for core final demand PPI—which excludes food, energy, and trade services (a category measured by markups rather than prices)—rose 0.6 for the month. Compared with a year ago, this is up 6.9 percent, down just two-tenths of a point from the March reading, which was revised up from 7.0 to 7.1 percent.
Producer prices for goods rose 1.3 percent in April compared with March and were up . The March figure was left unchanged at 2.4 percent and the February figure was revised up to 2.2 percent to 2.3 percent. This slow down in price gains, however, was due to a slow down in the rise in energy prices and food prices. Excluding food and energy, goods prices rose one percent, down only a tick from March’s 1.1 percent.
Producer prices for final demand services were flat with the prior month. The February figure was revised up to show a 0.5 percent gain, up from 0.3 percent. The March figure was revised up to 1.2 percent from 0.9. Trade services margins fell 0.5 percent.
The Producer Price Index (PPI) is sometimes inaccurately described as an inflation index for wholesale prices. Although it was once called the wholesale price index, it has never been focused on wholesale prices. Instead, it is constructed by looking at what businesses that produce goods and services in the U.S. were paid for goods and services, while the better-known Consumer Price Index measures what consumers paid and includes both imports and a stand-in for home ownership called owners-equivalent of rent that isn’t counted in PPI.
“The Wholesale Price Index (WPI) was the name of the program from its inception in 1902 until 1978, when it was renamed the Producer Price Index,” the Bureau of Labor Statistics explains on its website. It explains that: “the term Wholesale Price Index was misleading in that the index never measured price change in the wholesale market.”
The PPI measures prices both for various stages of intermediate demand, businesses selling to other businesses, and final demand, which measures domestic producers selling goods and services to domestic end-users, typically government agencies, consumers, or businesses. The widely reported headline number for PPI is the final demand figure.
The PPI excludes imports and doesn’t count sales taxes, since those are paid to foreign producers and governments. It also includes export prices, which are excluded from CPI because they are paid by non-U.S. consumers.
The target set of goods and services included in the PPI is the entire marketed output of U.S. producers. This includes goods, services, and construction products purchased by other producers as inputs to their operations or as capital investment, goods and services purchased by consumers either directly from the service producer or indirectly from a retailer, and products sold as export and to government. The CPI looks at the set of goods and services purchased for consumption purposes by urban U.S. households, excluding business purchases, government purchases, and exports. The CPI also excludes prices not paid directly by consumers, such as medical bills paid for by government programs or insurers, that are included in PPI.
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