Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  The Producer Price Index (PPI) fell 0.7% in April
Posted Under: Data Watch • PPI
Supporting Image for Blog Post

Implications: Given the loose stance of monetary policy, higher inflation is eventually coming, but it sure isn't here yet. Wholesale prices dropped in April by the most in three years reinforcing the signal from yesterday's report on prices for imports and exports. The main culprit behind the wholesale price drop was energy which declined 2.5% after falling 3.4% in March, helping to push overall producer prices down 0.7% in April. Energy prices are now down 13.3% at an annualized rate over the past six months. "Core" prices though, which exclude food and energy and which the Federal Reserve claims are more important than the overall number, were up 0.1% in April and are up 1.7% versus a year ago. Some analysts may suggest that with the overall PPI only up 0.6% from last year that the Federal Reserve has room for its latest round of bond buying. We think this is a mistake, and it seems like some more members of the FOMC are starting to think the same thing. Core inflation is likely to continue growing and, despite projections of bumper US crop yields, food inflation should continue moving upward given recent improvement in emerging economies. 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. Yesterday's inflation report showed import prices declined 0.5% in April and are down 2.6% from a year ago. Most of the decline is due to oil; excluding petroleum, import prices were down 0.1% in April and are down 0.3% in the past year. Export prices fell 0.7% in April and are down 0.9% in the past year. Farm exports were down 0.5% in April and are down 1.5% versus a year ago.

Click here for a PDF version
Posted on Wednesday, May 15, 2013 @ 10:18 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.