US wholesale inflation pressures eased last month

US wholesale prices fell last month, a sign that inflationary pressures in the economy are easing more than a year after the Federal Reserve began aggressively raising interest rates.

From February to March, the government producer price index fell 0.5% as energy prices tumbled after being flat from January to February. Compared to a year ago, wholesale prices rose 2.7% in March, a significant drop from a 4.7% year-on-year increase in February.

The Labor Department’s Producer Price Index reflects the prices charged by manufacturers, farmers, and wholesalers. It can provide an early signal of how fast inflation will rise to the consumer.

Wholesale inflation has declined steadily, from a record 11.7% annual rise in March 2022, since the Fed began raising its benchmark interest rate to combat the worst inflation in four decades. Starting in March of last year, the Fed has raised its key short-term rate nine times and is expected to do so again at its next meeting on May 2-3.

Thursday’s figures follow a report on Wednesday that showed US consumer inflation eased in March, with less expensive gasoline and groceries providing some relief to Americans. Still, consumer prices continue to rise fast enough to keep the Fed on track to raise rates further.

Core consumer inflation, in particular, remains stubbornly high. Measured year-over-year, core prices rose 5.6%, well above the Federal Reserve’s 2% inflation target. The year-over-year core consumer inflation figure rose in March for the first time in six months.

The collapse last month of two major US banks, which rocked the financial industry, has complicated the Fed’s decisions on interest rates. Minutes from the Fed’s March meeting, which followed the bank failures, show that the turmoil led the central bank to rally around a decision to raise its benchmark rate by just a quarter point, rather than a half. spot.

According to the minutes, Fed officials agreed that problems in the banking industry “would likely lead to weakening credit conditions” as banks sought to preserve capital by reducing lending to consumers and businesses.

Fed officials speaking this week have stressed the importance of monitoring bank lending. There are already reports of small businesses struggling to get loans, though it’s not yet clear how widespread the impact will be.

[Con información de The Associated Press]

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