In April, US PPI increased by 0.5% compared to the previous month, surpassing the expected 0.3%. Year-on-year, it reached 2.2%, slightly higher than the previous 2.1%. Core PPI also saw a month-on-month rise of 0.5%, exceeding the expected 0.2%. Year-on-year, it remained steady at 2.4%.
United States Core Producer Price Index (PPI) for April showed a month-on-month increase of 0.5%, surpassing expectations of 0.2%. This indicates a rise in the prices of goods at the wholesale level.
On a year-on-year basis, the Core PPI for April remained steady at 2.4%, meeting expectations.
The PPI excluding food, energy, and transportation, which provides a clearer picture of underlying inflationary pressures, rose by 3.1% year-on-year in April, up from the previous month’s 2.8%.
Month-on-month, the PPI excluding food, energy, and transportation increased by 0.4% in April, compared to a 0.2% rise in the previous month.
Summary
April’s PPI inflation hit 2.2%, meeting expectations.
Core PPI inflation also reached 2.4%, in line with forecasts.
This marks the first three-month consecutive rise since April 2022.
Month over month, PPI inflation surged by 0.5%, exceeding the expected 0.3%.
Given this sustained inflation trend, the possibility of Fed rate cuts diminishes.
Interest Rates:
Traders reduce expectations for a Federal Reserve rate cut in September. Fed swaps reflect reduced expectations for easing in 2024 following April’s PPI data.
Traders adjusted their expectations on Tuesday regarding the Federal Reserve’s likelihood to implement the first interest-rate cut in September, following a government report indicating higher-than-expected wholesale price increases in April.
The 0.5% rise in last month’s producer price index compared to the previous month didn’t offer much reassurance that progress on inflation had resumed, particularly after the first quarter’s strong inflation figures fell short of expectations.
Post the PPI report on Tuesday, traders estimated about a 60% probability of a rate cut in September, a slight decrease from the 64% probability anticipated before the report was released.
Downward March PPI revisions:
March’s PPI MoM was revised downward to -0.1% from the initial 0.2%.
March’s PPI YoY saw a revision down to 1.8% from the previously reported 2.1%.
The Core PPI for March was also revised downward to -0.1% from the initial 0.2%.
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