Published: Thu, April 12, 2018
Economy | By Melissa Porter

Wholesale prices show hint of inflation

Wholesale prices show hint of inflation

Producer prices are called at 3.3%, slowing from 3.7% a month earlier.

The data comes amid some worries that an escalating trade dispute between China and the United States could stoke price pressures over the coming months, though many analysts believe any impact on consumer prices will be limited.

When you strip out food and energy from the March index, prices were up a modest 0.2 percent, in line with estimates.

What they are saying?: "With underlying producer price inflation already at a seven-year high and the tightening labor market set to put upward pressure on wage growth, we expect a continued rise in inflation to prompt Fed officials to raise rates four times in total this year", said economist Andrew Hunter of Capital Economics.

The steep monthly decline reflected the unwinding of temporary price increases during Lunar New Year holidays in mid-February.

But excluding volatile food and fuel prices, "core" CPI rose 0.2 per cent, matching the consensus forecast.

On a month-on-month basis, the CPI declined 1.1 per cent, from a 1.2 per cent rise in February. Prices for fish, fish products, butter, bread, pasta, cheese, rice, meat and meat products grew by 1.6%-0.8%. Profits at industrial firms picked up pace in the first two months of the year from December but still lagged growth for the whole of 2017.

Ian Shepherdson of Pantheon Macroeconomics said the new signs of an upward trend meant the Fed was likely to raise rates a total four times this year rather than the three hikes now forecast.

In February, Inflation dropped to 14.3 percent compared to 31.7 percent in the same month of 2017. Stocks on Wall Street fell as investors anxious about rising tensions between the United States and Russian Federation over a possible US military action against Syria.

Gasoline prices tumbled 4.9 percent in March, the largest drop since last May, after falling 0.9 percent in February.

The core CPI was lifted by rising rents and healthcare costs.

A separate report, also released Wednesday by the Labor Department, showed average hourly earnings adjusted for inflation rose 0.4 percent from March 2017.

Economists were looking for an annual increase of 3.2%, down from 3.7% in February.

That's not to say everything was cheaper last month.

The price of alcoholic drinks and tobacco products increased by 1.3%, in particular those for tobacco goods by 1.7%, alcoholic drinks by 0.8%.

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