Wholesale prices in the United States picked up slightly in July yet still suggested that inflationary pressures have eased this year since reaching alarming heights in 2022.
The Labor Department reported Friday that its producer price index which measures inflation before it hits consumers rose 0.8% last month from July 2022.
The latest figure followed a 0.2% year-over-year increase in June, which had been the smallest annual rise since August 2020.
On a month-to-month basis, producer prices rose 0.3% from June to July, up from no change from May to June.
Last month’s increase was the biggest since January. An increase in services prices, especially for management of investment portfolios, drove the month-to-month increase in wholesale inflation.
Wholesale meat prices also rose sharply in July.
Analysts said the July rise in wholesale prices, from the previous month’s low levels, still reflects an overall easing inflation trend.
The figures the Labor Department issued Friday reflect prices charged by manufacturers, farmers and wholesalers.
The figures can provide an early sign of how fast consumer inflation will rise in the coming months.
Since peaking at 11.7% in March 2022, wholesale inflation has steadily tumbled in the face of the Federal Reserve’s 11 interest rate hikes.
Excluding volatile food and energy prices, “core” wholesale inflation rose 2.4% from July 2022, the same year-over-year increase that was reported for June.
Measured month to month, core producer prices increased 0.3% from June to July after falling 0.1% from May to June.
On Thursday, the government reported that consumer prices rose 3.3% in July from 12 months earlier, an uptick from June’s 3% year-over-year increase.
But in an encouraging sign, core consumer inflation rose just 0.2% from June, matching the smallest month-to-month increase in nearly two years.
By all measures, inflation has cooled over the past year, moving closer to the Feds 2% target level but still remaining persistently above it.
The moderating pace of price increases, combined with a resilient job market, has raised hopes that the Fed may achieve a difficult soft landing: Raising rates enough to slow borrowing and tame inflation without causing a painful recession.
Many economists and market analysts think the Feds most recent rate hike in July could prove to be its last.
Before the Fed next meets Sept. 19-20 to decide whether to continue raising rates, it will review several additional economic reports.
They include another monthly report on consumer prices; the latest reading of the Feds favored inflation gauge; and the August jobs report.
Inflation began surging in 2021, propelled by an unexpectedly robust bounce-back from the 2020 pandemic recession.
By June 2022, consumer prices had soared 9.1% from a year earlier, the biggest such jump in four decades.
Much of the price acceleration resulted from clogged supply chains: Ports, factories and freight yards were overwhelmed by the explosive economic rebound.
The result was delays, parts shortages and higher prices.
But supply-chain backlogs have eased in the past year, sharply reducing upward pressure on goods prices.
Prices of long-lasting manufactured goods actually dipped in June.
A new study has identified the primary force behind Venus’s extreme superrotating atmosphere: a once-per-day thermal tide driven by solar heating. Using data from Venus Express and Akatsuki along with circulation models, researchers show that this daily tide transports most of the momentum that accelerates cloud-top winds to speeds over 100 metres per second. The re…
Satire has long been an occupational hazard for politicians – and while it has long been cartoons or shows like Spitting Image, content created by artificial intelligence (AI) is increasingly becoming the norm.
A new page called the Crewkerne Gazette has been going viral in recent days for their videos using the new technology to satirise Rachel Reeves and other politicians around the budget.
On Sky’s Politics Hub, our presenter Darren McCaffrey spoke to one of the people behind the viral sensations, who is trying to remain anonymous.
He said: “A lot of people are drawing comparisons between us and Spitting Image, actually, and Spitting Image was great back in the day, but I kind of feel like recently they’ve not really covered a lot of what’s happening.
“So we are the new and improved Spitting Image, the much better Have I Got News For You?”
He added that those kinds of satire shows don’t seem to be engaging with younger people – but claimed his own output is “incredibly good at doing” just that.
Examples of videos from the Crewkerne Gazette includes a rapping Kemi Badenoch and Rachel Reeves advertising leaky storage containers.
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They even satirised our political editor Beth Rigby’s interview with the prime minister on Thursday, when he defended measures in the budget and insisted they did not break their manifesto pledge by raising taxes.
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Rachel Reeves has been accused of failing to “support the great British pub” as she promised in the budget, with owners facing skyrocketing business rates bills.
In her speech in the House of Commons on Wednesday, the chancellor said she was backing small businesses by introducing “permanently lower tax rates for over 750,000 retail, hospitality and leisure properties – the lowest tax rates since 1991”.
But while the government gave itself the powers to discount the business rates bills for high street businesses through legislation earlier this year, the chancellor only implemented a reduction of a quarter of what the government is able to, and she is being accused of imposing a “stealth tax”.
It has left small retail, hospitality, and leisure businesses questioning whether their businesses will be viable beyond April next year.
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8:46
Sky’s Ed Conway looks at the aftermath of the budget and explains who the winners and losers are.
A Treasury spokesperson said: “We’re protecting pubs, restaurants and cafes with the budget’s £4.3bn support package – capping bill rises so a typical independent pub will pay around £4,800 less next year than they otherwise would have.
“This comes on top of cutting licensing costs to help more venues offer pavement drinks and al fresco dining, maintaining our cut to alcohol duty on draught pints, and capping corporation tax.”
Business rates, which are a tax on commercial properties in England and Wales, are calculated through a complex formula of the value of the property, assessed by a government agency every three years, combined with a national “multiplier” set by the Treasury, giving a final cash amount.
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Image: Chancellor Rachel Reeves has been accused of imposing a “stealth tax” on hospitality businesses. Pic: PA
Over the last few years, small businesses were given business rates relief of 75% to support them over the COVID pandemic, and Ms Reeves reduced that to 40% at last year’s budget.
The idea was that at the budget this year, the chancellor would remove that remaining relief in favour of reforming the business rates system to compensate for that drop, while shifting the tax burden on to much bigger businesses and companies like Amazon with lots of warehouse space.
However, the chancellor only announced a 5p in the pound discount for small retail, hospitality, and leisure businesses, rather than the assumed 20p drop which the government gave itself the powers to implement, and which trade bodies had been lobbying for.
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2:57
How will your personal finances change following the budget announced by the chancellor?
On top of that, small businesses have seen the government-assessed value of their property increase dramatically, which wipes out the discount, and sees their business rates bill shoot far above what they had previously been paying.
One pub owner near Hull, Sam Caroll, has seen the assessed value of one of his two properties increase from £67,000 to £110,000 in just three years – a 64% increase.
He told Sky News that there is a “continual question” of business viability, and while he thinks they can “adapt” in the short term, “there will be a tipping point at some point”. Even at the moment, packing out their pubs seven nights a week, “it’s difficult for us to break even”, he said.
There will be a discount for small businesses to transition to the higher business rates level, but by year three, almost the full amount is expected to be payable, and Mr Carroll described it as “getting f***** slowly, instead of getting f***** overnight”.
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Sean Hughes, who owns multiple hospitality venues in St Albans, has also seen vast increases in the assessed value of his properties, and was sharply critical of the transitional arrangements the government is implementing.
He told Sky News: “Fundamental business rate reform was promised and we have total chaos. If [the system] was fair, why would they need transitional relief periods?”
A spokesperson of the Valuation Office Agency (VOA), which assesses the value of commercial properties for business rates purposes, told Sky News: “At the last revaluation, some sectors including hospitality were significantly affected by the pandemic, which resulted in much lower rateable values than they would have seen otherwise. Businesses that have now seen a recovery in trade are also likely to see an increase in their rateable value.”
However, Sky News has seen evidence of businesses whose assessed value did not decrease when assessed during the pandemic, but actually rose, and has risen dramatically this year.
Data compiled by the Pubs Advisory Service, shows that the number of pubs in the UK has decreased by nearly 5% in three years, but the average value of the properties has risen by an average of 36.82% per pub.
And analysis by UK Hospitality, the trade body that represents hospitality businesses, has found that over the next three years, the average pub will pay an extra £12,900 in business rates, even with the transitional arrangements, while an average hotel will see its bill soar by £205,200.
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The prime minister has defended the budget after he and the chancellor were accused of breaking their promise to voters.
The body adds that by 2028/29, an average pub’s business rates will have increased by 76% and an average hotel’s by 115%, compared to 16% for a distribution warehouse like the ones the web giants use.
It’s not just the business rates rise that is worrying owners – it is the increase in employers’ national insurance implemented at the last budget, the increase in energy bills over the last few years, and the rise in the minimum wage, particularly for young people.
With the budget set to squeeze disposal income, there is little room for price increases to make up the shortfall either.
In a letter to the chancellor on Friday, Liberal Democrat deputy leader Daisy Cooper said small business owners “have been pushed to tears as they’re hit with the bombshell of higher business rates bills”, noting that “the government has chosen not to use the full powers it gave itself to throw high streets a lifeline”.
She added that businesses had been promised “permanently lower business rates”, but it appears the government has “broken yet another promise, by imposing a stealth tax not just on people, but on treasured high street businesses too”, and called on ministers to “throw our high streets and Britain’s hospitality sector a lifeline”.
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Conservative shadow business secretary Andrew Griffith published his own analysis of the government’s budget measures on Friday morning, that found they will “hammer British pubs”.
Of the chancellor, he said: “She pretended in her budget speech to be supportive, whilst the true detail is that a combination of rate revaluations and scrapping reliefs will leave most pubs paying thousands of pounds more than they cannot afford.”
Kate Nicholls, Chair of UKHospitality, said in a statement: “The government promised in its manifesto that it would level the playing field between the high street and online giants. The plan in the budget to achieve this is quickly unravelling, and will deliver the exact opposite.”
She said they “repeatedly warned the Treasury” of the impending impacted of the value reassessment, but nonetheless, hospitality businesses are now facing “eye-watering increases”.
She added: “We agree with its reforms to deliver permanently lower business rates for hospitality and we appreciate the package of transitional relief, but its current proposal is not delivering lower bills. A 20p discount for hospitality would. We urge the chancellor to revisit.”