Core Producer Price Inflation Exceeds Expectations; Food Costs on the Rise
After the Consumer Price Index (CPI) exceeded expectations yesterday, attention has turned to this morning's Producer Price Index (PPI) print. There are hopes that the unexpected rise in CPI is only temporary. However, data suggests a confusing picture, with month-on-month (MoM) prints cooler than expected but year-on-year (YoY) prints hotter than expected.
Headline PPI Remains Unchanged MoM but Rises YoY
The headline PPI remained unchanged MoM, which is cooler than the expected 0.1% increase. However, it was up by 1.8% YoY, which is hotter than the expected 1.6% increase. This is a decrease from the upwardly revised 1.9%.
Energy Prices Lower PPI while Food and Services Surge
Energy prices have lowered the PPI, while food and service costs have surged.
Core PPI Rises, Exceeding Expectations
What's more concerning for those hoping for lower inflation is that the core PPI, which excludes food and energy, jumped to 2.8% YoY, which is hotter than the expected 2.6%. The PPI excluding food and energy rose by 0.2% MoM, as expected.
This is a significant deviation from the Federal Reserve's target of 2% and it seems to be moving in the wrong direction.
Bottom Line
The recent data on core producer price inflation and the surge in food costs present a complex picture of the economy. While some figures are cooler than expected, others are hotter, raising questions about the direction of inflation. What are your thoughts on these developments? Do you think this trend will continue? Share this article with your friends and discuss it. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.
