By Manuel Gutierrez, Consulting Economist to NKBA
If consumers think they have it tough when it comes to inflation, businesses experienced a 20.1 percent spike in the Producer Price Index (PPI) in February compared to a year ago — nearly three times the 7.9 percent jump in the Consumer Price Index during the same period.
- On a monthly basis, prices for all commodities rose 3 percent in February compared to January. Except for a 3.2 percent increase in May 2021, this is the biggest jump since July 1974, which was also the last time year-over-year prices were rising faster, at 20.3 percent.
- Overall, prices on products used for new residential construction were up 18.4 percent from a year ago, while nonresidential construction goods rose a slightly more modest 17 percent.
- The PPI varies widely in different product categories. For instance, home heating oil was up 77 percent in February, while processed food products rose a more modest 13 percent. Among the remodeling-related categories tracked, lumber and its byproducts jumped 22.6 percent in February. This is an improvement from 2021, when lumber prices reached stratospheric levels and the overall index hit a high of 118 percent last May.
- Among individual product categories, domestic water heaters showed the highest price inflation, posting a 29.3 percent spike in February (although the price increases eased from 38 percent in January). Window shades rose 19 percent from a year ago, residential stoves leapt 15.6 percent, household furniture prices climbed 13.7 percent from February 2021, and wood windows were up 11 percent. Floor coverings posted the lowest inflation among home products, inching up just 1.1 percent in the month.
