×

(KNSI) – The stock market is lower Thursday morning after the Producer Price Index came in above expectations.

PPI measures inflation among raw materials at the wholesaler level. Inflation in goods and services bought by customers also exceeded predictions. In better news, retail sales and job growth were higher than estimated as well.

St. Cloud State University Economics Professor King Banaian says January data can come with some caveats. He notes, “January numbers for retail sales are always adjusted. That adjustment is large, it’s almost 16%-17% between December and January. When we say retail sales were up 3% it means they fell relative to December, but they fell less than would be normal.” The employment figures similarly try to adjust for layoffs related to seasonal jobs for the Christmas holiday season.

Banaian says the weather probably played a factor. Regardless, it will give hawks on the committee that sets the Federal Funds Rate ammunition to reaccelerate rate increases.

The Federal Reserve Bank has been aggressively raising interest rates since last summer. Six months in, Saint Cloud State University Economics Professor King Banaian says it has had some effect.

“The goods inflation numbers actually have been falling in some areas. The Fed has had an impact in terms of what’s happening in real estate because mortgage rates and other items that are interest rate sensitive have gotten softer, but services like going to a restaurant have been very resilient to the increases.”

On Thursday, Cleveland Federal Reserve District Bank President says interest rate hikes should go back to a half-percent each meeting. The Federal Open Market Committee (FOMC) gathers every six weeks.

Banaian says the number to keep an eye on in future inflation reports is the “Core services ex. housing” figure. It rose by 6.3% year-over-year in January.

___

Copyright 2023 Leighton Enterprises, Inc. All rights reserved. This material may not be broadcast, published, redistributed, or rewritten, in any way without consent.

FOLLOW US FOR INSTANT UPDATES!

FOLLOW US FOR INSTANT UPDATES!

KNSI on Twitter

No feed items available at this time.