The Large Increase in the PPI

After only an increase of 0.1 percent in the month of Oct0ber, the producer price index, also known as the ppi, jumped an astounding 1.7 percent in November. It has been over fifteen years since the percentage was this high. Thus many people are beginning to worry that high inflation will be the result. Economists believe that energy prices made the biggest impact on the producer price index. In November, gasoline prices raised seventeen percent, home heating oil prices increased eighteen percent, diesel fuel saw a twenty-one percent increase, and jet fuel increased seventeen percent. The immense increases in the energy prices even overcame a drop in the prices for barrels of oil to create the large ppi percentage. In the month of October, barrels of oil were placed at fifty-five dollars a barrel. This price was reduced to forty-seven dollars a barrel. Interestingly, the drop in oil prices may actually lower the inflation rate for the United States. Along with reduced oil prices, rising interest rates will also lower the chances of inflated rates. Sung Won Sohn, chief economist at Wells Fargo, stated, "I'm reasonably sure we've seen the peak (for oil) and it's beginning to trend down and that should do a lot to decelerate inflation." Although the initial reaction to the soaring energy prices was one of concern for the possibility of increasing inflation, the rising interest rates and the decreasing of oil prices have reassured many economists that the country's inflation will remain at its current level.