Rising Import Prices should see further gains in the Producer Price Index

After data released earlier in the week showed gains in the Import Price Index exceeding analysts expectations, today’s Producer Price Index will be closely examined for further signs of inflationary pressures facing the US. Following a rise from 9.7% in March to 11.1% in April; a figure which analysts had forecast at a slightly more modest 10.5%; US producers are expected to face rising inflationary pressures in the coming months.

Today’s PPI data is expected to provide evidence of further gains, with analysts forecasting month on month growth of 0.6%. As energy prices continue to rise; with energy prices having seen particularly significant gains in recent months; producers attempting to maintain their margins will almost certainly look to pass rising production costs on to the end consumer. With import prices expected to continue upwards for a number of months, similar gains in the PPI figure are forecast. Today’s Year on Year figure is expected to see gains of around 6.5%.

As gains in import prices entice gains in PPI, inflationary pressures will almost certainly move from the US producer to the US consumer. At the same time though, there will invariably be a limit to the consumers’ acceptance of rising prices.