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US wholesale prices jump in March, but underlying figures point to softness

By Alexander Bueso

Date: Thursday 11 Apr 2019

US wholesale prices jump in March, but underlying figures point to softness

(Sharecast News) - Wholesale prices bounded past forecasts last month, but a closer look at the figures revealed the core measures of inflation were pointing to some softness ahead.
According to the Department of Labor, the US producer price index for final demand climbed at a 0.6% month-on-month clip in March, lifting the year-on-year rate of advance from 1.9% for February to 2.2% in March (consensus: 1.9%).

But it was the most volatile components that drove the increase, with gasoline prices jumping by 5.6%, alongside a rise of 1.1% in those for trade services and a 0.3% increase in food costs.

The 'core' PPI measure that excludes those components was in fact flat versus the previous month, so that the annual rate slowed from 2.3% to 2.0% - its slowest pace since August 2017.

"The PPI and the CPI for March both suggest that inflation pressures remain moderate and some underlying measures within both indexes even point to some softening. During this same period in 2018, the PPI was accelerating," said Mickey Levy at Berenberg Capital Markets.

To hammer home his point, Levy insisted, saying that: "The three-month annualized change in the core PPI increased to 1.1% (from 0.7%) and the six-month annualized change fell to 1.3% (from 1.8%), respectively, suggesting that the underlying trend in producer price inflation is near 1%. This compares to 2018 highs of 4.2% and 3.4%, respectively."

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