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Producer Price Index for January 2023:

Inflation rebounded at wholesale levels in January as producer prices rose more than expected at the start of the year, the Labor Department reported Thursday.

The Producer Price Index, which measures what raw materials sell on the open market, rose 0.7% on the month, its biggest rise since June. Economists polled by the Dow Jones had expected the stock to rise 0.4% after falling 0.2% in December.

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Core PPI, excluding food and energy, was up 0.5% compared to expectations of a 0.3% increase. Core, excluding trade services, rose 0.6% against an estimate of 0.2%.

On a 12-month basis, headline PPI increased 6%, still rising, but well off its March 2022 peak of 11.6%.

Markets fell after the announcement, with futures tracking the Dow Jones Industrial Average down about 200 points.

The PPI is not tracked as closely as other inflation indicators, but it can be a leading indicator as it measures the first price at which producers enter the open market.

The rise in PPI coincided with a 0.5% rise in January in the Consumer Price Index, which measures the price consumers pay for goods and services. Taken together, the indicators show that 2022 started off with a spike, although inflation appeared to be subsiding as 2022 drew to a close.

Economists believe January’s rise in inflation was largely due to some seasonal factors and a pick-up from the previous month, when inflation was more subdued. An unseasonably warm winter may also have played a role, and volatile fuel prices also spiked him during the month.

A report on Wednesday showed that consumer spending has not kept up with inflation as retail sales rose 3% for the month, up 6.4% year-on-year.

In other economic data on Thursday, the Labor Department reported unemployment claims fell to 194,000, down 1,000, below the Dow Jones estimate of 200,000. Also, the Philadelphia Federal Reserve’s February manufacturing index plummeted to -24.3, well below estimates of -7.8.

Fed policymakers are keen on inflation, so the January figures are unlikely to destabilize their stance that while progress is being made, momentum is unlikely to falter.

Cleveland Fed President Loretta Mester said, “We expect inflation to improve significantly this year, and even better next year, with inflation reaching its 2% target in 2025.” , my outlook depends on appropriate monetary policy.”

CME Group data shows the market expects the Fed to raise interest rates several more times this year, with the final “terminal” rate ending in the 5.25% to 5.5% range from the current 4.5% to 4.75%. increase. .

The increase in PPI was due to a 1% decrease in food while energy costs increased by 5%. The final demand index for goods rose 1.2%, the biggest one-month rise since June. About a third of that rise is due to his 6.2% rise in the gasoline index.

The services index rose 0.4%, boosted by a 0.6% rise in final demand service prices, which exclude trade, transportation and warehousing. Another big factor is his 1.4% increase in the hospital’s ambulatory care index.

https://www.cnbc.com/2023/02/16/producer-price-index-january-2023-.html Producer Price Index for January 2023:

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