NAM: Consumer Inflation At 40-Year High In December
Consumer prices rose 0.5 percent in December and the consumer price index has risen 7.1 percent over the past 12 months (seasonally adjusted), the fastest year-over-year pace since June 1982, according to Chad Moutray, Ph.D. and Chief Economist at the National Association of Manu- facturers (NAM). At the same time, core inflation (which ex- cludes food and energy) increased 5.5 percent year-over- year in December, the most since February 1991. The cost of used cars and trucks jumped 3.5 percent in December, with prices for new vehicles up 1.0 percent. The automotive sector continues to be challenged by sup- ply chain disruptions and the chip shortage. New vehicles and used cars and trucks have seen price growth of 11.8 percent and 37.3 percent year-over-year. Producer prices for final demand goods and services rose 0.2 percent in December, the slowest monthly gain since November 2020. Over the past 12 months, produc- er prices for final demand goods and services jumped 9.8 percent (seasonally adjusted), just shy of November’s record 9.9 percent. Core producer prices increased 6.9 percent year-over-year in December, the same pace as in November and remaining an all-time high. The Index of Consumer Sentiment declined to 68.8 in January, according to preliminary data from the University of Michigan and Thomson Reuters. This was not far from November’s reading (67.4), which was a 10-year low. Con- sumer sentiment has declined largely on worries about in- flation and the continued spread of COVID-19. Retail sales fell 1.9 percent in December, the first de- cline since July and well below the consensus estimate, which was for spending to have edged down just 0.1 per- cent. Indeed, the data declined for the most part across the board. This could be the result of a multitude of fac- tors, including the purchase of holiday gifts earlier than normal (as encouraged because of supply chain issues), the spread of the omicron variant and consumer worries about inflation. Despite the disappointing figures in the latest data, retail spending has soared 16.9 percent over the past 12 months, or 16.5 percent with gasoline stations and motor vehicles and parts sales excluded. Manufacturing production declined 0.3 percent in De- cember, pulling back from November’s 0.6 percent in- crease, which was the best level since December 2018. Manufacturers have been challenged by supply chain bottlenecks, workforce shortages, rising production costs and, more recently, the spread of the omicron variant. Manufacturing capacity utilization edged down from 77.2 percent in November, also the strongest since De- cember 2018, to 77.0 percent in December. Overall, man- ufacturing production has risen 3.5 percent year-over- year, with 1.5 percent growth relative to February 2020’s pre-pandemic pace. • www.boardconvertingnews.com
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January 24, 2022
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