US PPI Fell Unexpectedly in February

U.S. producer prices unexpectedly fell in February on weak trade margins, pointing to muted inflation pressures that could argue against an anticipated June interest rate hike from the Federal Reserve.

The Labor Department said on Friday its producer price index for final demand fell 0.5 percent after dropping 0.8 percent in January. It was the fourth straight monthly decline in the PPI.

In the 12 months through February, producer prices fell 0.6 percent, the first drop since the series was revamped in 2009, after being unchanged in January.

Economists polled by Reuters had forecast the PPI rising 0.3 percent last month and remaining unchanged from a year ago.

The decline in producer inflation came despite a stabilization in energy prices, which had weighed on price pressures in recent months.

The dollar’s strength against the currencies of the main U.S. trading partners is helping to keep a lid on inflation.

The low inflation environment could prompt the Fed to hold off on raising interest rates until much later this year, despite a tightening labor market.

via CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza