The Fed Gets another Reason to Raise Rates and Unravel QE

wolfstreet.com / by Wolf Richter / May 11, 2017 

Inflation pressures further up the pipeline rise the most in 5 years.

The Producer Price Index, which measures inflation at the wholesale level for goods and services, and thus up the pipeline from the Consumer Price Index, jumped 2.5% in April from a year ago, the steepest increase since February 2012, blowing past consensus expectations of  2.2% (chart by Trading Economics):

On a monthly basis, seasonally adjusted, wholesale prices rose 0.5% from March. Nearly two-thirds of that increase was due to services, the biggest part of the US economy, where prices increased 0.4% from March. Among the standouts, services less trade, transportation, and warehousing, jumped 0.8% from March.

And it wasn’t “food and energy”: the PPI without food and energy (“core” PPI) jumped 0.7% from March, its 11th month in a row of increases. It’s up 2.1% year-over-year. Back in March, it was up only 1.7%. So picking up momentum.

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