Gabriela Santos, chief market strategist at JPMorgan Asset Management, analyzes the Federal Reserve’s interest rate decision on “The Craman Countdown.”
Wholesale inflation eased more than expected in May, the latest sign that price pressures in the U.S. economy are easing.
The Labor Department said Thursday that the producer price index Wholesale inflation Retail prices before they reach consumers fell 0.2% month-on-month in May, the biggest drop since October. Year-on-year, prices remained up 2.2%, unchanged from the previous month and the highest level since April 2023.
These figures are below the monthly increase of 0.1% and headline growth of 2.5% predicted by LSEG economists.
In another sign that high inflation is easing, the core price index, which excludes volatile indicators such as food and energy, was flat this month, lower than both the 0.3% forecast and the 0.5% increase in the previous month.
The figure represented a 2.3% increase on a trailing-12-month basis, slightly below expectations.
“Thursday’s weaker-than-expected producer price index data was another sign of continued inflation progress and keeps us on track for a rate cut in 2024,” said Clark Bellin, president and chief investment officer at Nebraska-based Bellwether Wealth.
Why are groceries still so expensive?
High inflation Severe financial pressures With most U.S. households forced to pay higher costs for basic necessities like rent, groceries and gas, rising prices are especially devastating for lower-income Americans, who tend to spend more of their already-tight paychecks on essentials and therefore have less flexibility to save.
A Costco employee stocks produce at a Teterboro, New Jersey, Costco store on February 28. (Stephanie Keith/Bloomberg via Getty Images/Getty Images)
The data came a day after the Labor Department released more closely watched data. Consumer Price Index The Consumer Price Index (CPI) measures prices paid directly by consumers. The report said inflation was unchanged from the previous month and up 3.3% from the same period last year.
Both releases are seen as key indicators of inflation, with the producer price index considered a leading indicator of rising inflationary pressures as costs to consumers fall.
Various indicators indicate that inflation remains Federal Reserve A 2% target is recommended.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| Me: DJI | Dow Jones Average | 38712.21 | -35.21 | -0.09% |
| I:Comp | Nasdaq Composite Index | 17608.435575 | +264.89 | +1.53% |
| SP500 | S&P 500 | 5421.03 | +45.71 | +0.85% |
Click here to get FOX Business on the go
The Federal Reserve signaled on Wednesday that it is looking for more evidence that high inflation has been overcome before it starts cutting interest rates.
“We see [the May CPI] “Reporting as progress and building trust.” Federal Reserve Chairman Jerome Powell “But I don’t think we have enough confidence at this point to start easing policy,” he told reporters on Wednesday.
