(CNN) –– A key measure of inflation in the United States hit an all-time high during 2021, as price increases from the pandemic just aren’t going to go away.
The Producer Price Index, which tracks what US producers are paid for their goods and services on average, rose 9.7% last year without seasonal adjustments. This is the largest increase in a calendar year since the data series began to be recorded in 2010, according to the Bureau of Labor Statistics.
It was a slightly smaller advance than economists had forecast. But, it represents a 9.6% rebound recorded during the 12 months ending in November.
Excluding food, energy and business services prices, which measure changes in the margins received by wholesalers and retailers, the inflation rate rose 6.9% last year, compared to a modest increase of 1, 3% in 2020.
In December alone, producer price index data followed a similar pattern to the consumer price index released on Wednesday: prices did increase in December, but at a much slower pace than in previous months.
“It was not as dire as many feared. US producer price inflation rose 0.2% in December, which is the slightest increase since November 2020,” said Jennifer Lee, senior economist at BMO. , in a note to customers. “And considering that the average monthly increase over the last 12 months was 0.8%, well, 0.2% is positive news.”
What went up in price?
More than half of the increases in service prices were due to higher costs of doing business.
The prices of fuels and lubricants also increased, as did airline passenger services, food retail, and the wholesale trade of machinery and vehicles.
Overall, the goods price index actually fell in December, marking the first decline since April 2020, when the worst of the pandemic was reflected in economic data. Energy and food prices fell especially.
The producer price index tracks the prices of finished goods and services that are sold to final consumers. Also the goods, services and maintenance and repair constructions that are sold to the companies that manufacture those finished products.
On the positive side, prices for parts and maintenance fell in December. The index of processed goods registered its first reduction since April 2020, while the index of unprocessed goods registered its first drop after eight consecutive months of increases.
That eases the burden of passing higher costs onto end consumers, at least for now. Meanwhile, the intermediate demand for services became more expensive by rising 0.8%, the largest increase since June.
Will inflation continue to rise?
Inflation will probably continue to rise, at least in the short term.
“Things are still very hot compared to a year ago,” Lee said.
Although economists anticipate some slowdown in price increases, it will take some time for that to show up in 12-month inflation records.
“This sets the tone for what to expect for inflation in 2022: Prices that have risen the most in 2021, such as energy, food and used cars, will rise much more slowly or even decline,” said the chief economist at PNC, Bill Adams. “At the same time, inflation will widen in other price categories: Companies that saw their labor and material costs rise in 2021 will pass on those higher costs in 2022, as final demand remains strong,” it added.