The Producer Price Index (PPI), which measures inflation on the wholesale level, rose 0.5% in April, coming in hotter than estimates. Core PPI, which strips out volatile food and energy prices, was also above forecasts at a 0.5% rise.
What’s the bottom line? On the surface, these monthly figures looked like a significant rise in monthly wholesale inflation, but a deeper dive into the data tells a different story. Revisions to the previous report for March showed inflation was tamer than initially reported for that month, with both the headline and core readings revised lower from 0.2% to -0.1%. That’s a huge difference!
Plus, the year-over-year figures (2.2% headline and 2.4% core) came in as expected and in line with what the Fed wants to see, meaning the report wasn’t as concerning as the headline figures suggested.