Like so many economic reports these days, this morning’s update on producer prices for March is open to interpretation.
Depending on one’s capacity for optimism, or the lack thereof, the latest gauge of inflation represents either a reprieve from anxiety, or another reason to worry.
The good news is that wholesale prices rose 1% last month. Although that’s uncomfortably high, it’s down a bit from February’s 1.3% pace. Meanwhile, core PPI (excluding energy and food) was unchanged in March and below the 0.2% rise that the consensus outlook was projecting.
The bad news is that the PPI has climbed by 3.1% for the year through March. That’s far below the 12-month rolling peak in recent years, but it’s still too high to allow the Federal Reserve to focus exclusively on promoting economic growth in its monetary policy. “This certainly doesn’t let the Fed off the hook by any means,” Gina Martin, an economist at Wachovia Corp., told Bloomberg News. Inflation doesn’t seem to be rising, but neither is it falling, she explained. That’s a concern because inflation is “stubbornly staying high.”