The Fed's Preferred Price Index rose 4%. What happens next?

Michael Patrick, a chef and restaurateur in Memphis, had to increase the salaries of cooks and dishwashers to entice them to return to hi...


Michael Patrick, a chef and restaurateur in Memphis, had to increase the salaries of cooks and dishwashers to entice them to return to his upscale southern restaurant, Rizzo’s by Michael Patrick. Its food costs have also increased, as supply chain issues made it difficult to obtain chicken and other key ingredients. He therefore reacted by increasing menu prices twice in recent months. So far, its customers are not complaining.

“People don’t even blink,” he said. “No one said to me, ‘I can’t believe you raised the price of meatloaf by two dollars.’ “

But Mr. Patrick is worried about the effects of the Delta variant. He and his customers have learned to navigate pandemic life, he said, so he’s confident he can keep sales going. But if the resurgence of the virus leads to more closures of meat processing plants and other food producers, it could pose a greater challenge.

“Canola oil, beef, chicken – it’s all going up because the supplies just weren’t there,” he said. “I hope that in the end, these variations will not encourage many of these companies to close their doors again. “

How quickly today’s robust price gains fade will be important to workers. Rising prices eat away at workers’ paycheques. Profit after tax fell 0.5% in June, which explains the impact of inflation. Over the past year, inflation has more than offset a modest increase in after-tax income.

Data released on Friday showed that core inflation, which eliminates volatile food and fuel prices and can give a more accurate reading of price trends, rose 3.5% in June from the previous level. previous year, for the highest annual reading in 30 years.

The overall index climbed 0.5% from May to June, slightly less than the 0.6% expected by economists in a Bloomberg survey.

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Newsrust - US Top News: The Fed's Preferred Price Index rose 4%. What happens next?
The Fed's Preferred Price Index rose 4%. What happens next?
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