Stimulus Update: Wholesale Prices Are Falling, but Consumers Are Still Feeling the Pain

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It’s starting to seem like higher costs just aren’t going to go away. 

Many Americans have been struggling with higher living costs for well over a year now. And unfortunately, lawmakers don’t seem to be rushing to send any federal stimulus aid to help out.

Now to be fair, putting stimulus funds into Americans’ bank accounts is unlikely to solve the problem of inflation. If anything, it might only make the issue even worse.

But that doesn’t change the fact that many consumers are struggling to pay their bills, and have been for many months. And at this point, a lot of people may no longer have savings to dip into to compensate for higher costs.

Meanwhile, the Consumer Price Index (CPI) showed that inflation rose in February compared to January. However, the CPI showed a lower level of annual inflation in February than a month prior, so that’s at least one positive sign. And now, another key index is pointing to a drop in prices.

Producer prices are falling

In February, the Producer Price Index, which measures what producers get paid for goods and services, fell to 4.6% on an annual basis. In January, the index sat at 5.7% for that same measure. And between January and February, producer prices fell by 0.1%.

That’s a good sign on one hand. But it won’t necessarily spell the immediate relief consumers are desperate for. After all, it just shows that producers are being paid less for goods. It doesn’t mean goods have become affordable again.

Also, a 4.6% Producer Price Index reading doesn’t necessarily mean that next month’s CPI is going to plunge dramatically. So all told, while a lower annual reading is encouraging, it’s not a solution.

When will consumers finally get relief?

Last year, the problem of inflation got so bad that a number of states decided to send out stimulus payments to residents to help them cope with higher costs. Since then, inflation has dipped modestly, but it’s still high, historically speaking.

Since stimulus aid can’t solve the issue of inflation, consumers’ best bet right now may be to exercise a combination of patience and strict budgeting. Turning to the gig economy could also be a good way to cope with inflation, since right now, jobs seem to be fairly abundant.

Will tax credits be introduced to fight inflation?

That’s pretty unlikely. Lawmakers have been fighting to bring back the boosted Child Tax Credit, which was introduced in 2021 to provide relief while the pandemic was still raging. But so far, they’ve been unsuccessful.

It’s doubtful that lawmakers will get away with passing an inflation-specific tax credit. But struggling consumers might manage to eke out more tax savings by reading up on existing credits and deductions and claiming the right ones.

Those wishing for a stimulus check may also want to get their taxes done sooner rather than later if they’re anticipating a refund. Having that extra money arrive a few weeks earlier could be crucial at a time when living costs are still so unbelievably high.

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