Fed's Beige Book: Inflationary pressures remained strong, with firms continuing to pass costs on to consumers

Inflationary pressures in the US remained strong since mid-February, with firms continuing to pass swiftly rising input costs through to consumers, the latest Fed's Beige Book released by the Minneapolis Fed on Wednesday said, according to Reuters. The latest Beige Book is based on information collected before 11 April. 

Additional Takeaways:

Inflation...

In multiple districts, contacts reported spikes in prices for energy, metals, and agricultural commodities.

Strong demand allowed firms to pass through input costs to customers. 

Contacts in a few districts noted negative sales from rising prices. 

Agricultural conditions were mixed across regions. Farmers were supported by surging crop prices, but drought conditions were a challenge in some districts and increasing input costs were squeezing producer margins across the nation. 

Firms in most districts expected inflationary pressures to continue over the coming months. 

Labour market...

Several districts reported moderate employment gains despite hiring and retention challenges in the labor market.

Some contacts reported early signs that the strong pace of wage growth had begun to slow. 

 Firms reported inflationary pressures were contributing to higher wages. 

Hiring was held back by a lack of available workers, though several districts reported a modest improvement. 

Labor demand continued to fuel strong wage growth, particularly for 'footloose' workers. 

Economic activity/conditions...

Economic activity expanded at a moderate pace since mid-February.

The outlook for future growth was clouded by the uncertainty created by recent geopolitical developments and rising prices.

Consumer spending accelerated among retail and non-financial service firms, as Covid-19 cases tapered across the country. 

Manufacturing activity was solid overall across most districts, but supply chain backlogs, labor market tightness, and elevated input costs continued to pose challenges to firms' abilities to meet demand. 

Several districts noted China's covid-19 lockdowns had worsened supply chain disruptions. 

Vehicle sales remained largely constrained by low inventories. 

Commercial real estate activity accelerated modestly as office occupancy and retail activity increased. 

Districts' contacts reported continued strong demand for residential real estate but limited supply.