MercoPress. South Atlantic News Agency

US short term inflation under control, but PPI show upward trend

Gasoline at US pumps averaged 3.54 USD a gallon

US March retail prices rose 0.5% accumulating 2.7% in the last twelve months according to the latest report from the US Labour Department. Core consumer price index, which excludes volatile food and energy prices, was up only 0.1%.

Over the 12 months ending March 31, core CPI was up 1.2%, within the range considered acceptable by the Federal Reserve.

With unemployment still high, 8.8%, and wages stagnant, businesses are finding it difficult to pass on cost increases to customers, while the price of gasoline at the pump averaged 3.54 USD a gallon last month, compared with 3.18 a gallon in February.

Friday also brought the release of the Thomson Reuters/University of Michigan’s index on consumer sentiment, which rebounded to 69.6 in early April after dipping to 67.5 in March amid concerns about surging prices for food and energy. Analysts expected a smaller increase, to 68.5.

The Reuters/Michigan survey’s sub-index measuring consumers’ attitudes about current economic conditions registered 82.7, up slightly from March but short of February’s 86.9. The sub-index on future expectations stood at 61.2, compared with 57.9 in March and 71.6 points in February.

Meanwhile the US producer price index, PPI, maintained its upward trend in March, rising 0.7%, although it was the smallest increase in four months, reported the Labour Department.

The PPI, excluding volatile food and energy prices, increased last month by 0.3%. In March, energy prices rose 2.6%, but wholesale food prices fell 0.2%, the first drop in seven months.

Wholesale prices, not seasonally adjusted, have risen 5.8% over the past year, Labour Department figures show.

The prices of intermediary products – those that require more processing before they can be sold to the public – and excluding energy and food rose 0.9% last month. Experts view this as a very clear indicator of the trend of inflation.

China and other emerging economies strong demand and the fall in the value of the US dollar continue to push raw materials prices higher. This has divided opinions among members of the Federal Reserve. While some members of the Open Market Committee feel increases may only be seasonal, others fear that added with the abundant global liquidity it sill spur inflation.