Consumer Optimism Rises: Wholesale Inflation Declines

Good news for American consumers and the Federal Reserve: According to reports, wholesale inflation in the country came down in May. According to the data released by the Bureau of Labour Statistics, the inflation in the wholesale market came down by 0.2% in May. This is a stark contrast to the increase in inflation by 0.5% in April. This is even better than what many economist firms predicted. Economist polls by FactSet had predicted a 0.1% increase in inflation rather than a decrease. A major contributor to lowering inflation rates is the 4.8% reduction in energy prices in May. 

Core producer inflation remained the same as in April, and many experts and economists projected it to rise to 2.5%. Moreover, the prices of goods also experienced a deflation of 0.8%, which is the highest since 2023, while services maintained the inflation pace of April at 0.6%. 

Also Read: S&P 500 Jumped 0.8% To Cross 5,400 Mark On Wednesday

Christopher Rupkey, chief economist in FwdBonds, said in a public note, “The better readings on inflation this month look like they are only occurring because economic growth has stalled and the country is in danger of going over a cliff. This is exactly what an economy looks like when the country enters a recession, and it will be a miracle if we miss one. The Fed missed the inflation outbreak, and now it looks increasingly like they misread the risks of recession and soaring job losses.”

Many market observers believe that these cuts shown in Thursday’s data will help the Feds gain more confidence in lowering the interest rates and getting the economy back on track. This cut in inflation rates has also shown its effects on the stock market, with the Nasdaq and S&P 500 both opening slightly higher in the morning trading. 

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