Wholesale prices in the US accelerated again last month, the latest sign that inflation pressures in the economy remain elevated and might not cool in the coming months as fast as the Federal Reserve or US President Joe Biden’s administration would like.
The Labor Department said yesterday that its producer price index (PPI) — which tracks inflation before it reaches consumers — rose 0.6 percent from January to last month, up from a 0.3 percent rise the previous month. Measured year over year, producer prices rose by 1.6 percent last month, the most since September last year.
The figures could present a challenge for the Fed, which meets next week and is counting on cooling inflation as it considers when to cut its benchmark interest rate, now at a 23-year high.
Photo: EPA
The Fed raised rates 11 times in 2022 and last year to fight high inflation. A rate cut by the Fed could boost the economy and financial markets because it would likely ease borrowing costs over time for mortgages, auto loans and business lending.
Higher wholesale gas prices, which jumped 6.8 percent just from January to last month, drove much of last month’s increase. Wholesale grocery costs also posted a large gain, rising 1 percent.
Yet even excluding the volatile food and energy categories, “core” inflation was still higher than expected last month. Core wholesale prices rose 0.3 percent, down from a 0.5 percent jump the previous month. Compared with a year ago, core prices climbed 2 percent, the same as the previous month.
The PPI can provide an early read on where consumer inflation is headed. It is also closely watched because some of its data is used to compile the Fed’s preferred inflation gauge, known as the personal consumption expenditures price index.
A separate report yesterday showed that retail sales grew 0.6 percent from January to last month, after a sharp fall of 1.1 percent the previous month. The data points to cooling consumer demand, with many consumers having run through their pandemic-era savings and putting more spending on credit cards.
A more cautious consumer could provide some reassurance to the Fed that the economy is cooling a bit, a trend that could potentially lower inflation over time.
Thursday’s data follows a report earlier this week on the government’s most closely watched inflation measure, the consumer price index (CPI). The CPI rose by a sharp 0.4 percent from January to last month and was up 3.2 percent compared with a year earlier.
Still, the acceleration in producer prices suggested that inflation could stay elevated into the spring. Economists and Wall Street traders expect the Fed to cut its benchmark rate in June, but that could slip into later in the year.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS