The Producer Price Index (PPI) released today shows U.S. producer prices fell in March by the most since the start of the pandemic. The data follows yesterday’s Consumer Price Index report, which showed inflation has fallen for nine straight months.
Dr. Rakeen Mabud, Groundwork’s Chief Economist, sees today’s figures as further evidence of the relationship between inflation and corporate profit margins:
“For the past two years, inflation has provided the perfect cover to big corporations looking to push price increases far beyond what their increased costs would justify. Now that their costs are coming down, big companies face a choice: pass them along to consumers or keep prices high and soak up the extra profits for themselves. If recent history is any indication, we know exactly which path they will choose.”