US producer prices are skyrocketing, and the numbers are alarming. Since the 2020 pandemic, producer prices have jumped 26%. By comparison, prices rose only 8% in the five years preceding the pandemic, which is three times less. This stark increase highlights the ongoing inflationary pressures in the economy.
Many components of the Producer Prices Index (PPI) have soared even faster than the average. Trade services and total manufacturing industries prices are both up 32% over the last five years. Furthermore, transportation and warehousing industries prices have risen by 29%. These sectors are critical to the economy, and their rising costs are a clear indication of the persistent inflationary forces at play.
The Federal Reserve has been cutting rates as though inflation is defeated, but the bond market tells a different story. The long end of the bond market is rising as though inflation is here to stay. This divergence raises the question: who’s right? The rise in producer prices paints a clear picture: inflation isn’t just lingering; it’s still a major issue.
A 26% jump in producer prices since 2020 compared to just 8% in the five years prior is staggering. It’s hitting critical industries like trade services, manufacturing, and transportation even harder. These price increases don’t stay contained; they eventually trickle down to consumers, keeping pressure on household budgets and making it harder for families to recover. This isn’t a sign of a healthy economy; it’s a signal that structural inflationary forces are still very much alive.
Until these trends reverse, everything from production to logistics will remain more expensive, feeding into higher costs across the board. Inflation isn’t going away anytime soon. The rise in producer prices is a stark reminder that inflation is still a problem.
Sources:
https://www.argaam.com/en/article/articledetail/id/1782359
https://www.cbsnews.com/news/ppi-inflation-labor-department-2025-december/
https://www.morningstar.com/bonds/2025-bond-market-outlook-yields-range-bound-volatile
https://www.schwabassetmanagement.com/content/bond-market-update
https://www.morningstar.com/markets/2024-review-2025-market-outlook
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