News just in for the deflation mongers out there: the US Producer Price Index fell an unexpected 1.2 per cent in March — the sharpest decline in three months. The market had been expecting a flat number.
Here’s the latest from Reuters:
Washington, April 14 – The Producer Price Index fell an unexpected 1.2% in March as energy prices stumbled 5.5% after two consecutive months of gains, the Labor Department reported today.
Economists were expecting overall PPI to be unchanged in March after gains of less than 1% in January and February. Core inflation, which excludes food and energy price effects, was unchanged in March, nearly in line with the 0.1% consensus forecast. Overall energy prices fell 5.5% as gasoline and home heating prices each saw steep declines in the area of 13%. Diesel fuel fell 17.2% and liquefied petroleum gas fell 7.5%.
Food prices fell 0.7%, the fifth consecutive month of decline. Most of that decline was seen in meat and dairy products, while fruits and vegetables saw minor gains. Overall inflation has fallen an unadjusted 3.5% over the last 12 months, the largest year over year decline since January 1950. Core inflation over the last 12 months rose 3.8%.
Retail sales figures, meanwhile could be seen as even more bleak, falling 1.1 per cent in March against general market expectations for some sort of improvement.
US Treasuries pared loses following the data, while US equity futures fell.