The Consumer Brands Association (CBA) warned that slowing wholesale prices in the latest Bureau of Labor Statistics readout are still significantly higher than just one year ago and that the consumer packaged goods (CPG) industry continues to face steep production costs.
The July Producer Price Index (PPI) rose 9.8% year-over-year, but for the first time since April 2020, posted a decline of 0.5% over last month. For the CPG industry, key commodities are still coming in higher than overall wholesale prices, as the food PPI increased 13.3% over last year.
“Slowing energy prices fueled the welcome easing reflected in today’s numbers, but with the heavy caveat that we are still far worse than pre-pandemic norms or even last year,” says Katie Denis, VP of communications and research at CBA. “The fragility of our supply chain has been on stark display for the last few years, and we must remain cautious of looming threats that can quickly upset progress and not walk away from policies that help guard against disruption.”
- Key commodities once again showed notable increases over last year. Diesel fuel dropped from last month but is still 71% more than last year, significantly affecting the CPG industry as it makes up one-fifth of all freight transportation.
- Commonly used ingredients and materials also showed spikes over last year. For example, wheat is up 22%; aluminum is up 13%; and edible oils are up 14%. Eggs remained staggeringly expensive, at 171% higher than the same time last year.
- Consumers are well aware of the link between supply chain pressures and inflation. While many respondents expressed no opinion (25%), nearly half (48%) said easing supply chain pressures would have a positive effect on inflation.