(The Center Square) – Newly compiled data from the Federal Reserve shows that inflation is hurting businesses, costing consumers, and likely not going away anytime soon.
The Federal Reserve released its “Beige Book,” a report that compiles reports from “Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources” from the 12 Fed districts around the country.
According to the latest report, those contacts agreed that inflation would continue for months.
“Inflationary pressures remained strong since the last report, with firms continuing to pass swiftly rising input costs through to customers,” the report said. “Contacts across Districts, particularly those in manufacturing, noted steep increases in raw materials, transportation, and labor costs.”
The increased cost of fuel has been a major factor as well. Crude oil surpassed $103 per barrel Thursday, and according to AAA, gas prices are at a national average of $4.12 per gallon, a significant increase from an average of $2.88 at the same time last year.
“A few reports noted that input suppliers were making use of more flexible contract terms or only honoring price quotes for 24 hours, the report said. “Strong demand generally allowed firms to pass through input cost increases to customers, for example, via fuel surcharges for freight and airline fares. However, contacts in a few Districts noted negative sales impacts from rising prices. Firms in most Districts expected inflationary pressures to continue over the coming months.”
The report comes on the heels of a steady stream of federal inflation data showing major price increases. Producer prices have risen at record rates while consumer prices have increased at the highest level in four decades.
Another recent report showed small businesses saw the same trouble with inflation.
A survey of small businesses from the National Federation of Independent Businesses reported that “the net percent of owners raising average selling prices increased four points to a net 72% (seasonally adjusted), the highest reading in the survey’s history.”
“Price hikes were the most frequent in wholesale (84% higher, 0% lower), construction (83% higher, 3% lower), agriculture (78% higher, 2% lower), and retail sales (77% higher, 2% lower),” the report said. “Seasonally adjusted, a net 50% of owners plan price hikes, up four points from February.”
“Thirty-one percent of owners reported that inflation was the single most important problem in their business, up five points from February and the highest reading since the first quarter of 1981,” the report added. “Inflation has now replaced ‘labor quality’ as the number one problem.”
Many groups contacted by the Fed also confirmed the labor shortage.
“Most contacted firms in diverse sectors continued to face difficulties in hiring and/or retaining workers, but some experienced an easing of labor shortages in recent months,” the report said.