Consumer prices rise at 'robust' pace as input costs remain elevated: Fed's Beige Book

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U.S. consumer prices have been rising at a "robust" pace as high input costs continue to get passed down, according to the Federal reserve's Beige Book, which is based on data collected through Feb. 18. As a result of rising input costs combined with ongoing materials shortages, businesses expect additional price hikes over the next several months.

Meanwhile, U.S. economic activity has expanded at a "modest to moderate" pace since mid-January, with consumer spending generally weaker than in the prior report. Note the U.S. personal savings rate is down to 6.4% in January vs. 19.9% in Jan. 2021. Economic headwinds for most districts included a surge in COVID-19 cases and supply chain issues and low inventories continue to "restrain growth." Banking contacts also signaled some weakening financial conditions, though loan demand was broadly unchanged.

For the labor market, employment rose at a "moderate pace," the report highlighted. "Widespread strong demand for workers remained hampered by equally widespread reports of worker scarcity, though some Districts reported scattered signs of improving labor supply." The Fed's contacts said they expect the tight labor market and strong wage growth to continue, though some districts noted signs of wage growth moderating.

Earlier, Fed Chair Jerome Powell said it's time "to move away from highly stimulative" policy.