ICYMI: Groundwork’s Rakeen Mabud Reacts to February PPI on CNBC’s Squawk Box

ICYMI: Groundwork’s Rakeen Mabud Reacts to February PPI on CNBC’s Squawk Box

Watch the clip here. 

Today, Groundwork Collaborative Chief Economist Rakeen Mabud joined CNBC’s Squawk Box to react to today’s February Producer Price Index (PPI) from the Bureau of Labor Statistics:

“When you zoom out and look at the trajectory of PPI, input costs have come down precipitously; they are really coming down fast. Prices are coming down but they’re not coming down quite as fast. What is sitting in that gap? Your input costs are coming down but your prices are high. That’s big corporations sitting there, juicing that gap for all its worth.

“We see that in the data, we saw that 53% of inflation in the second and third quarters of 2023 was driven by [profits]. It’s very clear to me that this is a supply-side problem that the Fed doesn’t have any real tools to address. Powell himself has said this. I think it’s absolutely clear the Fed needs to cut rates, stay the course on their proposed rate cuts, and if anything do it sooner.”

Watch the full clip here. Email press@groundworkcollaborative.org to speak with one of Groundwork’s experts about today’s PPI report.

Background

• In January, Groundwork found that from April to September 2023, corporate profits drove 53% of inflation. Comparatively, over the 40 years before the pandemic, profits drove just 11% of price growth.
• Last week, Groundwork found that shrinkflation is responsible for as much as 10% of inflation in key product categories, like paper products and snacks. The report makes clear that “shrinkflation,” also known as “price pack architecture,” is playing a crucial role in growing profit margins while shortchanging consumers, with executives citing outrageous gimmicks like portion control and reducing emissions as excuses for ripping off consumers.
• Last month, Groundwork released a report that found families are now paying 25 percent more for groceries than they were prior to the pandemic, compared to 19 percent overall inflation. The report offers policy recommendations to reduce the risk of future grocery price spikes, such as investigating the use of slotting fees that require product manufacturers to “pay to stay” on shelves and scrutinizing anti-competitive mergers throughout the food supply chain.