For well over a month now, inflation has been a prominent theme driving most of the activity across all markets.
While some may point to a natural easing period for stocks that have been sitting in “bubble” territory for some time now, inflation is becoming harder to ignore. And for proof of that, you don’t need to look any further than producer prices, which are trending higher.
In February, U.S. producer prices increased significantly, leading to the largest annual gain in nearly 2-1/2 years. There is considerable slack in the labor market, which could make it even harder for businesses to pass on the higher costs to consumers, but we’ll see in the weeks and months ahead.
On Friday, the Labor Department reported the producer price index for final demand rose 0.5% last month, which followed a 1.3% jump in January. This was the biggest advance since December 2009.
In the 12 months through February, the PPI surged 2.8%, the most since October 2018. The PPI increased 1.7% year-on-year in January. Economists polled by Reuters had forecast the PPI gaining 0.5% in February and jumping 2.7% year-on-year.