The U.S. producer price index (PPI) slowed to a monthly decrease of 0.1% in February, and the annual growth rate fell to 4.6%, the lowest since March 2021, showing that the U.S. Federal Reserve's (Fed) strategy to combat inflation is working. Inflation has cooled significantly. However, retail sales in February fell by 0.4% month-on-month and increased by 5.4% year-on-year, both falling short of expectations, highlighting that high interest rates and inflation have prompted consumers to reduce spending.

 

In addition, the Federal Reserve Bank of New York announced on the same day that the Empire State Manufacturing Sentiment Index fell by 19 points to minus 24.6 in March, far below the minus 5.8 in February and the minus 8 expected by the market. On behalf of the New York State manufacturing boom has shrunk sharply.

 

The U.S. Department of Labor announced on the 15th that the PPI fell by 0.1% in February, which was far lower than the 0.3% increase in January and market expectations. The PPI annual growth rate in February was 4.6%, lower than the 5.7% increase in January and the 5.4% increase expected by the market. PPI is considered a leading indicator of inflation.

 

Excluding volatile food and energy prices, the core PPI was flat in February from a month earlier, down from a 0.1% rise in January and a market forecast of 0.4%. In terms of annual growth rate, the core PPI slowed to an annual increase of 4.4% in February, lower than the 5% increase in January and the 5.2% increase expected by the market, and the lowest since March 2021.

 

In fact, the US Consumer Price Index (CPI) has already shown signs of cooling inflation. According to recent data, the monthly CPI growth rate slowed to 0.4% in February in line with expectations, and the annual growth rate of 6% rewritten the lowest since September 2021 and fell for eight consecutive months. But core inflation picked up slightly in February, underscoring concerns that inflationary pressures will remain tenacious.

 

Although the annual growth rate of inflation is slowing down, coupled with the crisis of successive bank failures recently, the financial market still expects that the Fed will continue to raise interest rates at its regular meeting next week, with the highest probability of raising interest rates by 1 yard.

 

According to the Ministry of Commerce announced on Wednesday, retail sales fell 0.4% in February, worse than the 3.2% increase in January and the market's expected decrease of 0.3%. On a yearly basis, retail sales rose 5.4 percent in February, down from a 7.7 percent gain in January. The main reason is that consumers reduce spending on goods such as cars.

 

Excluding volatile items such as oil and autos, core retail sales were flat in February from a month earlier, down from a 2.8 percent gain in January. If consumers continue to cut spending, it may deal a bigger blow to the economy. After all, more than two-thirds of the US economy comes from consumer spending. (Source: chinatimes0316) ☺