U.S. unexpectedly shows signs of deflation

According to the report, producer prices (PPI) in the United States unexpectedly fell in March. Analysts believe that this happened against the background of a decrease in the cost of gasoline and the appearance of signs of a decrease in core inflation of productive prices.

In particular, the producer price index for final demand fell by 0.5%. Economists predicted that PPI will not change at the end of the month and will grow by 3.0% year-on-year. The February data has been revised and the PPI has not changed. Earlier it was reported that the index decreased by 0.1%.

In the year to March, PPI grew by 2.7%, which was the smallest year-on-year increase since January 2021, after a 4.9% increase in February.

It is also reported that general consumer prices in March practically did not increase. At the same time, core inflation remains high, and rents grew at the slowest pace in almost a year.

The 1.0% drop in commodity prices accounted for two-thirds of the PPI drop in March. Commodity prices fell by 0.3% in February. Gasoline prices fell by 11.7% in March. There was also a decrease in prices for diesel fuel, household gas, jet fuel and electricity.

Market participants are now betting that the US Federal Reserve will raise the rate by another 25 basis points at its meeting on May 2-3. Most likely, this will be the last rate hike as part of the Fed's monetary policy tightening campaign since the late 1980s. In total, since March last year, the Fed has raised the discount rate by 475 basis points from almost zero to the current range of 4.75-5.00%.