Producer Price Index shows inflation at lowest annual rate in nearly two years

CAPE GIRARDEAU, Mo. (KBSI) – Southern Illinois University economics professor Scott Gilbert isn’t all that worried about the current state of inflation.

“While it’s always a concern for an economist when we see those rising prices, it doesn’t seem to be a huge gamechanger or a source of worry,” he said.

Annual inflation as measured by the Producer Price Index, which measures what suppliers are charging businesses, sits at 6 percent for January. While still undeniably high, this is the lowest it has been since March 2021. 

So, why should consumers care about producer prices? Gilbert said these costs could have an impact on consumer prices down the road. 

“If you’re a consumer, you might want to be worried about those because they may be a leader indicator of what you’re own prices of shopping and buying could be in two, three months’ time, for example,” he said.

Just because producer prices are up does not necessarily mean those costs are passed on to consumers, though. It is determined on a number of factors like competition. 

“You have business, you’ve got your consumers. I’ve got a business, and I’m competing for those same consumers. Which of us is going to raise the prices to the consumer? If you raise the prices to the consumer and I don’t, maybe I get your customers,” Gilbert said. “Choosing prices for a business always involves an element of strategy.” 

All things considered, Gilbert is hopeful about the direction inflation is heading. 

“Year-over-year percent changes have trended downward quite systematically, and I’m hoping that they’ll continue to do that in the coming months,” he said.