Freeman Addresses Record-Breaking PPI and Inflation, Demands Action on Longstanding Policy Issues That Can Ease Pressure
The Consumer Brands Association urged policy action today as yet another signal of a challenging cost environment was announced by the Bureau of Labor Statistics. The June Producer Price Index (PPI), released this morning, showed a 7.3% year-over-year rise, the biggest jump on record. On a monthly basis, PPI rose 1%, once again higher than the expectations of economists which were closer to 0.6%.
The PPI spike comes on the heels of yesterday’s Consumer Price Index increase and the same day as Federal Reserve Chairman Jerome Powell testified before the House Financial Services Committee, reaffirming that inflationary pressures are temporary. But Biden administration officials are reportedly saying that “temporary” could mean a full year — or even two — of elevated costs.
“How many records need to be set before we accept the economic realities we are facing?” asked Consumer Brands President and CEO Geoff Freeman. “What many in Washington have deemed transitory has lingered for months, shows no signs of easing and has real consequences for manufacturers producing essential goods that Americans use every day.”
Some key prices for the CPG industry have fallen, but monthly declines are relative in broader context. Corn, a key commodity for many industry products including everything from cereal to pet food, dropped 9% since last month but is still up 120.8% since last year.
In addition, there are costs that are still soaring, like aluminum scrap — used to make cans and foil — which was up 10.4% since last month and 100.2% since last year. There were also notable increases that not only affect CPG but other industries. The BLS release noted that 70% of the June surge in prices for unprocessed goods for intermediate demand could be traced to a 9.9% increase in crude petroleum.
“Regardless of commodity or even how long we’re contending with inflation, these record-breaking numbers should create some urgency for a discussion about government’s role,” Freeman added. “There are policy challenges that have been with us far longer than inflation that could ease some of the pressure we’re contending with. There can be no more important moment to consider them.”
Since the beginning of the pandemic, Consumer Brands has consistently called for a federal office of supply chain, most recently in a letter to congressional leaders, to give greater visibility into challenges as they emerge. Consumer Brands has also urged the Biden administration to take action to alleviate supply chain pressures by modernizing trucking capacity rules and bringing more flexibility to Hours of Service regulations and truck weights.
“As the difficult cost environment rages on, we can and must take action to ease pressure in the short term and leave our industry and our country in a more competitive position for the future,” said Freeman.
The Consumer Brands Association champions the industry whose products Americans depend on every day, representing nearly 2,000 iconic brands. From household and personal care to food and beverage products, the consumer packaged goods industry plays a vital role in powering the U.S. economy, contributing $2 trillion to U.S. GDP and supporting more than 20 million American jobs.
Published on July 14, 2021
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