Gains in Oil and Gasoline Boost Producer Prices
By TSC Staff
5/11/01 8:47 AM ET
Consumers hit the stores in April. Retail sales were stronger than expected, government data released this morning show.
Retail sales (definition | chart | source) had been expected to move higher despite expectations there will be another drop in consumer confidence when the latest report is released after the market opens. But sales came in much stronger than expected, gaining 0.8% in April. That's signficantly more than the 0.2% rise that was expected.
Excluding automobiles, retail sales gained 0.7%, also higher than the 0.4% increased that was anticipated by economists polled by Reuters.
Data about retail sales in March were revised lower to show that sales dropped 0.4% that month. Investors yesterday got a hint that April was a strong month. Same-store sales data for the month, released by several retailers yesterday, came out stronger than expected at discount stores, but were weak at department stores.
Producer prices (definition | chart | source) , which gauge growth in prices paid by manufacturers and help measure inflation, rose a bit more slowly than expected in April. The PPI, as the report is known, gained 0.3% in April. It was expected to rise 0.4%. Producer prices fell 0.1% in March.
Excluding volatile food and energy, however, producer prices rose a bit more than expected. They gained 0.2% in April, but were expected to increase only 0.1%.
Some recent economic releases have shown signs of an upward creep in inflation, a problem that could slow the Federal Reserve's rate-cutting schedule. The Fed, which meets next on May 15, doesn't want to drop rates so much that increased demand gives manufacturers and retailers a reason to raise prices. For the past few weeks, the market has been banking on the belief the Fed will cut rates another half a percentage point as a followup to the four other rate cuts it's made since the beginning of the year. |
