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U.S. PPI Comes In Weaker Than Expected Rising 0.1% In February

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(Kitco News) - Market participants shouldn’t expecting inflation to pick up anytime soon as pipeline inflation pressures remain muted.

Wednesday, the U.S. Labor Department said its Producer Price Index (PPI) rose 0.1% in February, following January’s drop of 0.1% ; the data was weaker than expected with economists’ forecasting an increase of 0.2%.

At the same time core PPI, which strips out volatile food and energy costs, dropped 0.1% last month, following January’s increase of 0.1%. Economists were expecting to see wholesale inflation rise 0.1%.

This is the third consecutive month core inflation has missed to the downside. According to some analysts, weak inflation pressures will be good for gold as it will ensure that the Federal Reserve stays on the sidelines for the foreseeable future.

The gold market is seeing little reaction following the disappointing inflation data. April gold futures last traded at $1,306.50 an ounce, up 0.65% on the day.

Economists pay close attention to producer prices as it is a leading indicator for consumer prices. Companies pass on higher costs to their customers. Economists note that the weaker than expected PPI data raises the downside risk to consumer inflation pressures.

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