The headline PPI for March fell .5% m/o/m vs the estimate of no change while February was revised up by one tenth. It was mostly energy prices as the core rate of down one tenth was about as forecasted when we include the February upward revision of two tenths. The y/o/y core gain of 3.4% was in line with expectations but a slowdown from 4.8% in the month before. The headline slowed to a rise of 2.7% y/o/y. Energy prices fell 6.4% m/o/m and by 7.2% y/o/y and driven by a drop in gasoline prices. Food prices though continued higher, rising by .6% m/o/m and 5.1% y/o/y.
Core goods prices were up .3% m/o/m and by 4.3% y/o/y. Light motor truck prices rose .7% m/o/m, leading the way. Service prices fell .3% m/o/m while still higher by 2.8% y/o/y. Keeping a lid on it was a drop in pricing for transportation/warehousing of 1.3% m/o/m and is little changed now y/o/y.
Prices in the pipeline were benign and down by 5% for processed items and by 17% for unprocessed.
Bottom line, it’s important to contextualize the moderation in y/o/y inflation and for pipeline prices too. The March 2022 headline PPI was up 11.7% y/o/y. The March 2022 comparison for core PPI was 9.7%. Thus, easy comparisons alone are enough to slow the rate of wholesale inflation but certainly being helped too by a slowdown in general price rises. As the CPI is the real market mover, the 5 yr inflation breakeven is up 2 bps in response after falling by 6.5 bps yesterday. With all the inflation stats this week, it’s down 2 bps this week to 2.37%. Rate hike odds didn’t change and stand at 66% for another 25 bps and hasn’t really moved over the past few days notwithstanding the drop in headline inflation and that is because the core rates have been about in line.
Core PPI y/o/y
Initial jobless claims rose to 239k from 228k last week and that was 4k more than anticipated. This brings the 4 week average up to 240k from 238k and that is just off the most since November 2021. Continuing claims fell to 1.81mm from 1.823mm and hovering around the highest since December 2021. Bottom line, last week’s upward revisions reset the bar and reflected a labor market not as robust in terms of the firing side as thought before. And this week’s data continues on with the new theme.
4 Week Avg in Initial Claims
Continuing Claims
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