In March, the producer price index (PPI) rose by 0.2%, which was lower than the 0.3% estimate and a decrease from the 0.6% increase in February. The core PPI, excluding food and energy, also rose by 0.2%. On a 12-month basis, the PPI increased by 2.1%, the largest gain since April 2023, pointing to ongoing inflation pressures. Services saw a 0.3% increase, with securities brokerage and investment-related fees jumping 3.1%, while goods prices decreased by 0.1%. Despite rising energy prices, final demand costs for energy fell by 1.6%. The final demand index for gasoline also declined by 3.6%.
On the consumer side, prices continued to rise in March, with concerns mounting that the Federal Reserve may not be able to lower interest rates anytime soon. Initial jobless claims fell to 211,000, below the 217,000 estimate, while continuing claims increased to 1.82 million. These economic indicators are closely monitored as the Federal Reserve considers its next steps on monetary policy. The CPI release from the previous day showed annual inflation at 3.5%, well above the Fed’s 2% target, leading markets to adjust expectations for interest rate cuts.
The release of economic data had little impact on markets, with stock index futures slightly higher and Treasury yields declining. The market now anticipates only two interest rate cuts this year, likely not starting until September, according to CME Group data. The changing economic conditions and inflation levels are influencing the Federal Reserve’s decision-making process regarding monetary policy. The recent data highlights ongoing concerns about inflation and its potential impact on interest rates and economic stability.
