A critical measure of inflation in the United States rose for a third straight month, leaving many market analysts doubtful that the Federal Reserve will move to reduce interest rates before the November election. The April Producer Price Index (PPI) was up a shocking 0.5 percent month over month. This exceeded the expected 0.3 percent increase.
The new PPI data add to growing evidence that inflation has become either sticky, just above the Federal Reserve’s 2 percent target, or has even re-accelerated. Market futures slid slightly on the news of the hot PPI data.
A re-acceleration in inflation follows the Bureau of Labor Statistics employment numbers earlier this month, which suggested that the unusually resilient job market might finally be weakening. The uptick in unemployment had left some hopeful that the Federal Reserve could soon begin cutting interest rates. The new PPI data, however, suggests the central bank will likely keep rates at their current level for the time being.
The National Pulse reported earlier on Tuesday that a study by the Federal Reserve details how price increases were driven predominantly by inflation and not corporate greed. “Data for the current recovery show that the increase in corporate profits is not particularly pronounced compared with previous recoveries,” the Federal Reserve researchers wrote. They added: “Markups also have not played much of a role in the slowing of inflation since the summer of 2022.”
Joe Biden recently insisted during an interview with CNN that inflation was at 9 percent when he came into office. In reality, inflation was at a low of 1.4 percent when the 81-year-old Democrat was inaugurated. However, it quickly rose to more than 9 percent just over a year into his term.