Supply Managers Hint at Inflation Relief Ahead

Slower price hikes for manufacturing materials should eventually reach consumers

Engineer operating on a lathe machine in the engineering part production line.

Nitat Termmee / Getty Images

If your household budget has been squeezed by higher and higher product prices, there’s a glimmer of better times ahead from the factory floors where that stuff is made. 

U.S. manufacturers saw the prices they pay for raw materials increase in December, but by far less than in November, the Institute for Supply Management said Tuesday, citing its monthly survey of supply managers. In fact, an index measuring the pace of price increases fell more than it had in any other month since 2010, the group said.

The move is a good sign for future consumer inflation, economists said. Not only that, but supply chain problems that have fueled the accelerating inflation improved a bit as supplier deliveries didn’t slow as much as in the previous month. Hiring got slightly easier for the fourth month in a row, too, according to the survey. 

“Demand remains strong as price pressures and supply problems are fading—if only incrementally,” economists at Wells Fargo Securities wrote in a commentary. “Supply chains are still a problem, though the logjam may be starting to break up.” 

The report adds to hopeful signs that inflation isn’t likely to get much worse before it gets better. The inflation rate reached 6.8% in November, the highest since 1982, as problems with making and transporting enough to meet demand contributed to a spike in costs for everything from groceries to gas. 

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  1. Institute for Supply Management. "Manufacturing PMI at 58.7%"

  2. Wells Fargo. "Three Cheers for the Decline in the ISM Index."

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