January PPI Report

You thought it was over, didn't you? You thought the inflation talks were done. Well, you guessed WRONG. Inflation talks will never end. We will have an endless cycle of inflation dropping. In my opinion, Inflation will never truly end because I can't buy my kilogram of chicken for 5 euros anymore.

What is PPI?

The Bureau of Labor Statistics (BLS released the Producer Price Index (PPI) for the United States); the PPI measures the average change in prices received by domestic producers for their goods and services and is used to track inflation and economic growth.

The Producer Price Index (PPI) is an important economic indicator because it provides insight into inflation and economic growth. Changes in the PPI can signal shifts in the supply and demand for goods and services and provide an early warning of potential changes in consumer prices. This information is helpful for businesses, investors, and policymakers who use it to make pricing, production, and investment decisions.

The PPI report was just released. It showed that inflation has risen on a month-to-month basis. The PPI for this month came in at -0.5%, while the forecast was -0.1%; We saw a considerable miss and cool-off in producer prices. This may lead to a change in their interest rate. The Y-o-Y PPI forecast is 6.8% but came in at 6.2%.

The report provides early evidence that the Fed’s rising interest rates campaign is doing its job. The next big test will be at the CPI release. At the next FOMC meeting, we expect the FED to raise interest rates by 25bps. But with next week's CPI report, we never know what the Federal Reserve will decide. There is always the possibility that they raise 50bps.