ROCHESTER, N.Y. — Inflation is moving in the wrong direction, according to new data released by the U.S. Bureau of Labor Statistics.
The Producer Price Index, which measures how much more producers are paying to get goods to market, is up 5.4% year over year. The increase is driven largely by a huge hike in the price of diesel.
When it costs more to make products and move them across the country, consumers eventually pay more for those products.
Farmers facing the impacts
For AJ Wormuth, owner of Half Full Dairy and chairman of the Northeast Dairy Producers Association, every facet of farming has gotten more expensive since the start of the war with Iran. That includes the diesel to fuel equipment, the feed being loaded into trucks and the cost of getting milk to market.
“Diesel is having a huge effect right now. It affects our trucking rates to get our milk to market,” Wormuth said.
Price of diesel and natural gas
The average price of diesel nationally is $5.98 per gallon. AAA said that’s the highest price ever recorded.
Diesel is the fuel of the family farm from planting to harvest to market. Wormuth is not alone in feeling the financial strain.
“This year we’ve seen a dramatic increase in fertilizer prices. There was a survey conducted by the American Farm Bureau and in the Northeast 70% of farmers indicated that they couldn’t afford fertilizer prices this year,” said Ashley Sardo, manager of national affairs for the New York Farm Bureau.
The price of natural gas, the main product in some types of fertilizer, has skyrocketed. That helps explain why the Producer Price Index has gone up more than anticipated.
Impact on grocery store prices
Eventually, that affects all of us.
“When we continue to see all these costs increase it does affect consumer goods, what they pay for in the grocery store,” Sardo said.
The Consumer Price Index, which measures inflation in the goods and services consumers buy, will be released Friday. Economists are expecting the CPI to hold steady at 3.4%.
That number could largely determine whether the Federal Reserve decides to raise interest rates next week to cool inflation.
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