US wholesale inflation cooled off in March
The First Month of March FOODS U.S. Cosmic Price Fluctuations: Why Food Prices Decracted Over the Last Two Years
In March, grocery prices fell for the first time since September 2020, according to data released Wednesday by the Bureau of Labor Statistics.
The prices of fruits and vegetables and dairy products fell. The other indexes, for non-alcoholic beverages, cereals and bakery products and all other groceries, went up.
A number of groceries experienced large price increases over the course of the year. Eggs rose 36%, margarine went up 33.4%, flour got 17.5% pricier, potatoes went up 9.7%, cheese rose 8.2% and milk went up 5.5%.
Some prices cooled over the course of the year: Bacon fell 5.5%, uncooked beef roasts got 4.4% cheaper, and uncooked ground beef prices dipped 1.4% — though meat is still relatively expensive given how much prices soared in 2021. The fresh fruit was down 1.5%.
The war in Ukraine can affect food prices as can a number of other factors. In addition to disrupting supply chains, these have provided cover for food companies to raise prices.
But US consumers, who have been contending with high inflation for months on end, have recently been pulling back on pricier items, flocking to low-cost retailers and trading down to store-brand or cheaper items.
It’s a huge shift, according to research shared with CNN, as the most expensive tier of products went from 24.5% of the market in January to 9% in March. Meanwhile, the cheapest tier of online groceries grew in market share by 13 percentage points to nearly half the market, according to Adobe.
From February to March, adjusted for seasonal swings, eggs had the most dramatic decrease, with a 10.9% decline. Egg prices increased due to the impact of the avian flu, and other companies took advantage of the disruption to pad their profits. But more recently, egg prices have been coming down.
US inflation at the wholesale level continued its downward slide in March with annualized price increases sinking dramatically to 2.7% from an upwardly revised 4.9%, according to the Producer Price Index released Thursday by the Bureau of Labor Statistics.
On a monthly basis, producer prices slumped by 0.5%, driven by falling goods prices, specifically lower energy prices. Prices for fresh and dry vegetables also fell, as did services, while the price indexes for categories such as light motor trucks, chicken eggs and meats moved higher.
The Central Bank of New York Revisited: An Outlook for the PPI and the Labor Market since the March 2022 Pandemic
Economists were expecting annual inflation, as measured by the PPI, to land at 3% for the 12 months ended in March and for no change from the month before.
“It’s good news that it looks like inflation is coming off the boil here,” Chris Rupkey, chief economist at FwdBonds, told CNN. I think the slowing in producer goods will result in lower prices for things on store shelves in the coming months.
For the 12 months ending in March, the core price index was up 3.4%, down from the previous upwardly revised level of 4.8%.
Much like CPI, the annual PPI also appears to have benefited from base effects, when year-over-year comparisons are volatile. In March of 2022, when Russia invaded Ukranian and food and energy prices skyrocketed, the PPI shot up to a record 11.7%.
Since the June 22, 2002 gain of 11.2%, thePPI has been cooling, as supply chains have gotten back into balance after being disrupted due to the Pandemic.
Initial weekly claims for unemployment insurance climbed to 239,000 for the week ended April 8, the highest level since January 2022. The number of people who have filed continuing claims for more than one week decreased from the previous week.
Weekly jobless claims, considered a proxy for layoffs, can be volatile and frequently subject to revision. Last week, the Labor Department made a number of adjustments to data in order to better account for the Pandemic-era dynamics.
Unemployment is an indicator of recession, which Federal Reserve economists say became more likely following last month’s banking crisis, according to the minutes from the central bank’s March policy meeting released Wednesday.
The labor market becomes unglued when layoffs start and no one can stop it. He said the policy tightening has done a lot and it was too late.
We are not quite there right now. … If initial claims fall back under 200,000, where they were for a couple of weeks at the start of the year, then OK, the recession is off. If it continues to grow, I would be concerned.
