(Kitco News) – Consumer should continue to find some relief from rising prices later this year as producers see their inflation pressures drop a lot faster than expected.
the U.S. Labor Department said its Producer Price Index (PPI) fell 0.5% last month following February’s revised unchanged reading. According to consensus forecasts, the data was significantly weaker than expected with economists looking for a 0.1% decline.
The report said that annual inflation rose 2.7%, down from 4.6% reported in February. According to consensus estimates, annual inflation was forecasted to rise 3.0%.
While headline wholesale inflation dropped sharply, the data also highlights relatively stable core inflation, which strips out volatile food and energy prices.
The report said that core PPI fell 0.1% last month. According to consensus estimates, economists were forecasting a 0.2% increase.
Meanwhile, for the year, core inflation rose 3.4%, unchanged from last month.
The gold market continues to see solid gains as inflation pressures continue to ease. June gold futures last traded at $2,045.20 an ounce, up 1% on the day.
However, some analysts note that gains for gold could be limited as markets still expect the Federal Reserve to raise interest rates by 25 basis points next month.
“PPI is pipeline inflation and it shows that there currently isn’t much in the pipeline. That could change with changes in commodity prices but right now, the mode in markets is that we’re shifting back to a low-inflation world,” said Adam Button, chief currency strategist at Forexlive.com.
