A measure of wholesale prices rose less than expected in March, perhaps providing some relief from fears that inflation will remain higher for longer than many economists had expected.
The producer price index rose 0.2% for the month, less than the Dow Jones consensus estimate of 0.3% and not as large as the 0.6% increase in February, a Bureau of Labor news release said Statistics from the Ministry of Labor on Thursday.
However, on a 12-month basis, the producer price index rose 2.1%, the strongest increase since April 2023, suggesting pressure in the pipeline that could keep inflation high.
Excluding food and energy, core PPI also rose 0.2%, in line with expectations. Excluding core-level trading services, the increase was 0.2% per month, but 2.8% year-on-year.
The release comes a day after the BLS reported that consumer prices rose more than expected again in March, raising fears that the Federal Reserve will not be able to cut interest rates any time soon.
On the producer price side, the increase in March was driven by services, which recorded a month-on-month increase of 0.3%. Within this category, the index for securities brokerage fees and other investment-related fees increased by 3.1%.
In contrast, goods prices fell 0.1%, up from 1.2% in February. The recently rising final demand costs for energy have even fallen by 1.6% month-on-month. However, wholesale prices for final consumer goods, excluding food and energy, increased by 0.8% and 0.1%, respectively.
Although prices at the pump rose, the final demand index for gasoline fell 3.6%. This contrasted with the consumer price index, which showed gasoline rising 1.7% month-on-month.
The markets hardly reacted to the data. Futures tied to major stock indexes rose slightly even as Treasury yields fell.
In other economic news Thursday, initial jobless claims fell to 211,000, down 11,000 from the previous week’s upwardly revised level and below the Dow Jones estimate of 217,000.
According to the Labor Department press release, continuing claims, which were a week behind, increased to 1.82 million, up 28,000 during the period.
Economic data will be closely watched as the Federal Reserve considers its next steps in monetary policy.
Wednesday’s release of the consumer price index rattled markets that had been expecting a series of aggressive interest rate cuts this year. The report showed an annual inflation rate of 3.5%, well above the Fed’s 2% target.
According to data from CME Group, the market currently expects only two cuts this year, which are not expected to begin until September.
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2024-04-11 14:07:45
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