Producer Prices Jump 10%

The producer price index slowed slightly but not enough to keep the index from hitting double-digits in February…(BLS)

• M-O-M: The Producer Price Index for final demand increased 0.8% in February, this is down from the 1.2% increase reported in January.

• Y-O-Y: The Producer Price Index increased 10.0% year-over-year, this is unchanged from January’s revised number.

NOTE: Removing food and energy still put the core index at 6.6%, this is down from December’s high of 7.0%.

Last month’s data was actually revised upward so if we were going off release data this month was the first time we saw a double-digit jump in year-over-year comparisons. This is probably why Fed traders are back to pricing in 7 standard quarter point rate hikes this year. Tomorrow the Fed will announce its first rate hike since December 2018. Powell’s testimony at the start of the month indicated a quarter point hike is the likely outcome from the FOMC. However, with double-digit PPI you can understand why some would like to see a more aggressive 50 bip hike.