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) Rose 0.5% in April
Posted Under: Data Watch • Employment • Government • Inflation • PPI • Fed Reserve • Interest Rates • Spending
Supporting Image for Blog Post

Implications:  Inflation pressures appear to be peaking, but that doesn't mean a return to 2% inflation is anywhere on the horizon.  Producer prices rose 0.5% in April following three consecutive monthly increases of 1.0% or more to start 2022.  Producer prices are now up 11.0% versus a year ago, which is a modest improvement from the March reading of 11.2%, but nothing that should persuade the Fed that anything other than combating inflation is – and rightfully should be – their primary mission for the foreseeable future.  Looking at the details of the April report, goods prices led the overall index higher.  Energy prices rose 1.7% in April, while food prices rose 1.5% on the month, but the main drivers of inflation came from outside of these typically volatile categories.  Prices for motor vehicles and equipment rose 0.8%, leading "core" producer prices higher by 0.4% in April, bringing the twelve-month increase in core prices to 8.8%.  And price pressures remain elevated further back in the supply chain, as prices for processed and unprocessed goods for intermediate demand are up 21.9% and 48.1%, respectively, in the past year.  On the services side of the economy, a 3.6% rise in the costs for transportation and warehousing services was offset by a decline in margins to services producers (trade services – which measures the margins received by wholesalers and retailers – fell 0.5% in April), leaving services prices unchanged for the month.  In short, inflation continues to run at the highest pace in decades.  This is what happens when you add money to the system at a faster pace than you can grow output.  Fed Chair Jerome Powell was right in saying that the Fed needs to act "expeditiously" to address the damaging impacts of inflation, but a focus on raising interest rates and reducing the size of the Fed balance sheet are not enough by themselves.  Until the Fed gets money growth under control, high inflation is here to stay. We can only hope that those in Washington learn the lesson that their actions have very real (and lasting) consequences.  In other news this morning, initial unemployment claims rose 1,000 last week to 203,000.  Continuing claims fell 44,000 to 1.343 million.  These figures are consistent with continued growth in May. 

Click here for a PDF version
Posted on Thursday, May 12, 2022 @ 11:00 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.