Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  The Producer Price Index (PPI) Rose 0.2% in January
Posted Under: Data Watch • PPI
Supporting Image for Blog Post

 
Implications: Despite a continued drop in energy prices, overall producer prices rose 0.2% in January, the first upward move in four months. Given higher energy prices so far in February, we anticipate another larger gain in overall prices in next month's report. "Core" prices, which exclude food and energy and which the Federal Reserve claims are more important than the overall number, were also up 0.2% in January and tell a somewhat different story than the overall PPI. In the past year, overall producer prices are up 1.4% while core prices are up 1.8%. But, in the past three months, energy prices have pushed down overall producer prices to a negative 1.8% annual rate even as core prices rose at a 2% rate. Some analysts may suggest that with the overall PPI up only 1.4% from a year ago that the Federal Reserve has room for the new round of bond buying it announced a couple of months ago. We think this is a mistake. Core prices are likely to continue growing at roughly the recent pace. Food inflation has been moving upward and may continue to do so given recent improvement in emerging economies, and energy prices are now headed upward again as well. Monetary policy is loose enough already. The problems that ail the economy are fiscal and regulatory, not monetary. Adding even more excess reserves to the banking system is not going to boost economic growth. Given the loose stance of monetary policy, higher inflation is eventually on the way.

Click here for a PDF version
Posted on Wednesday, February 20, 2013 @ 9:37 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.