From egg prices to housing, US inflation is heating up again

finance.yahoo.com

(Bloomberg) — No matter what metric you’re looking at, US inflation is moving in the wrong direction again.

Most Read from Bloomberg

Whether it’s a house or a carton of eggs, price growth is once again intensifying across a broad range of indicators. Much of that has to do with the same supply and demand factors and labor-market pressures that led to the initial inflation surge in the pandemic, while planned tariffs from President Donald Trump are heightening concerns that prices will rise even more.

The scope of reports indicating a resurgence in price pressures — spanning from input costs to wage growth to inflation expectations — underscores the Federal Reserve’s intent to keep interest rates on hold for the time being. Policymakers’ preferred gauge of underlying inflation probably picked up in January, ahead of data due Friday.

Follow The Big Take daily podcast wherever you listen.

“Our outlook is very much for inflation to be coming back. We’ve been saying second half of this year, but it seems like the pressures are already starting to build,” said Lauren Saidel-Baker, economist at ITR Economics.

And between the administration’s policies on tariffs and immigration, there’s more to come, she said. “I want to be absolutely clear: there are upside risks to our inflation outlook.”

Here are some of the inflation measures that are heating up again:

Costs of materials like lumber and steel have been high for several years coming out of the pandemic and are moving up even more. A measure of input prices for manufacturers this month reached the highest since October 2022, according to S&P Global. A similar gauge from the Institute for Supply Management rose last month to the highest since May.

Businesses surveyed by the Dallas Fed in February reported that an index of prices for raw materials doubled to the highest since September 2022, around the time when overall US inflation rates peaked. One food manufacturer responded that the items it imports will get more expensive because of tariffs, and higher prices will be borne by consumers.

“I have more uncertainty about the future business/consumer environment than ever before in my 40 years of operating businesses,” the food manufacturer said.

Groceries have come back into the spotlight again largely because of record-high egg prices, due to the worst-ever bird flu outbreak in the US. Persistent price increases in areas like food, as well as other big expenses like housing, healthcare and car insurance, are hindering progress on broader inflation, even as costs of other things like furniture and appliances are largely declining.