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05/14/2024 |

April PPI Data Reveals Mixed Inflation Trends

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April PPI Data and Market Reaction

The Producer Price Index (PPI) data for April showed a mixed picture of inflation. While the monthly increase of 0.5% was higher than expected, the annual rise of 2.2% met economists’ predictions. This led to a moderate uptick in the S&P 500, as investors prepared for upcoming consumer price index (CPI) and retail sales reports on Wednesday. Despite these mixed signals, the S&P 500 showed resilience, ending the day higher, while the 10-year Treasury yield dipped marginally.

Details Analysis of PPI and CPI Expectations

Excluding food and energy, the PPI rose 0.3% month-over-month, surpassing forecasts slightly. The March PPI was revised downward, which may suggest that the core Personal Consumption Expenditures (PCE) price index was not as high in the first quarter as initially reported. Healthcare service prices, a significant factor in the Fed’s core inflation rate, saw a modest increase, while airfares dropped by 3.8%, providing some relief. Conversely, portfolio management fees unexpectedly rose by 3.9% in April, reflecting stock market trends.

Implications for Fed Rate Decisions and Market Outlook

With the core CPI expected to rise by 0.3% in April, the 12-month core inflation rate may decline slightly. The market remains uncertain about the timing of the Fed’s first rate cut, with odds suggesting a possible move by September. Fed Chair Jerome Powell described the PPI data as “quite mixed,” noting that revisions to previous months tempered the overall impact.