US Markets
Thursday, April 11th, 2024 3:36 pm EDT
Key Points
- Wholesale prices increased less than expected in March, potentially easing concerns about prolonged inflationary pressures.
- The Producer Price Index (PPI) rose by 0.2% for the month, falling below the 0.3% estimate and the previous month’s 0.6% increase.
- Despite the modest monthly increase, the PPI climbed 2.1% on a 12-month basis, indicating sustained pipeline pressures that could maintain elevated inflation levels.
In March, the producer price index (PPI) saw a modest increase of 0.2%, falling below the 0.3% estimate predicted by the Dow Jones consensus and a decrease from February’s 0.6% rise, as reported by the Labor Department’s Bureau of Labor Statistics. Nonetheless, the PPI climbed 2.1% on a 12-month basis, marking its most significant surge since April 2023, signaling persistent pressures in the supply chain that could sustain elevated inflation levels. Excluding food and energy, the core PPI also rose by 0.2%, aligning with expectations. However, excluding trade services from the core level, the increase stood at 0.2% monthly and 2.8% from a year ago. The release followed a report by the BLS indicating that consumer prices surged more than anticipated in March, fueling concerns about the Federal Reserve’s ability to lower interest rates in the near future. The rise in March’s PPI was primarily driven by services, witnessing a 0.3% increase, particularly notable in the securities brokerage and investment-related fees index, which surged by 3.1%. Conversely, goods prices experienced a 0.1% decrease, overturning February’s 1.2% increase. Notably, energy costs for final demand declined by 1.6% during the month, despite recent upticks. Nevertheless, wholesale prices for final demand food and goods (excluding food and energy) climbed by 0.8% and 0.1%, respectively. Despite rising gasoline prices at the pump, the final demand index for gasoline itself fell by 3.6%, contrasting with the consumer price index’s 1.7% increase for gasoline in the same period. Market reactions to the data were subdued, with futures tied to major stock indexes slightly higher, while Treasury yields saw a decline. Additionally, initial jobless claims fell to 211,000, below the previous week’s revised level and expectations, while continuing claims increased to 1.82 million, according to the Labor Department. These economic indicators are being closely monitored as the Federal Reserve evaluates its future monetary policy decisions. Following Wednesday’s CPI release, which showed annual inflation at 3.5%, well above the Fed’s 2% target, markets have adjusted their expectations, now pricing in the possibility of just two interest rate cuts this year, likely commencing in September, according to CME Group data.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/04/11/ppi-inflation-report-march-2024-wholesale-prices-rose-0point2percent-in-march.html
