This month’s Producer Price Index (PPI) report just came out, shedding light on wholesale inflation trends and how productivity costs are developing in America. This data plays a critical role in shaping Federal Reserve policy decisions, as it provides insight into whether businesses are facing rising input costs, which could eventually affect consumer inflation.
The PPI reading for March is considered even more important this time around. With the looming trade war between the U.S. and China creating uncertainty in global supply chains, producer costs will likely be the first to experience volatility.
March PPI Data
- PPI (MoM): 0.4% (Previous: 0.0%, Forecast: 0.1%)
- Core PPI (MoM): -0.1% (Previous: -0.1%, Forecast: 0.3%)
- PPI (YoY): 2.7% (Previous: 3.2%, Forecast: 3.3%)
- Core PPI (YoY): [3.3%] (Previous: 3.4%, Forecast: 3.6%)
These figures follow yesterday’s Consumer Price Index (CPI) report, which showed:
- Headline CPI (YoY): 2.4% (Below forecast of 2.5%, previous 2.8%)
- Core CPI (MoM): 0.1% (Below forecast of 0.3%, previous 0.2%)
- CPI (MoM): -0.1% (Forecast was 0.1%, previous 0.2%)
With CPI showing weaker-than-expected inflation, today’s PPI report will help determine whether cost pressures remain at the producer level or if inflationary pressures are easing across the supply chain.
A softer-than-expected PPI reading will likely reinforce the deflationary trend seen in CPI, suggesting that cost pressures on producers are easing. This could bolster confidence in lower inflation moving forward, potentially giving the Federal Reserve more room to consider rate cuts at its May 6-7 meeting.
Market Reactions
Bitcoin started the day trading at around $81,838. As buyers attempt to bring the asset back to the $82k level, today’s PPI reading could have a net impact on BTC performance this Friday.
Initially, the asset reacted favorably to the deflationary PPI trend, gaining around 0.6% in value shortly after the release. Whether Bitcoin will continue to climb upward remains to be seen, as the market is still heavily influenced by negative selling pressure from the economic uncertainty revolving around the trade war.
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