Seems Counter-Intuitive in This Crisis: Inflation Heats up for Services Firms, and They’re Able to Pass it on Via Higher Prices

by Wolf Richter
Wolf Street

Even manufacturers, after months of crushed commodities prices, experience inflation and are able to pass it on. Stimulus money the government and the Fed have thrown around by the trillions.

It seems somewhat counter-intuitive in this crisis that companies in the services and non-manufacturing sectors – which dominate the US economy – would report higher input prices and higher sales prices. And there are now also smaller pricing pressures cropping up in the manufacturing sector.

“Inflationary pressure returned as both input prices and output charges rose for the first time since February, with both increasing at solid rates,” reported IHS Markit this morning in its Services Purchasing Managers Index (PMI) for June.

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