If inflation is rising it is not quite so evident in the wholesale inflation data.  The Producer Price Index for March was reported as Flat or 0.0% and the core rate which takes out food and energy came in +0.3%.  Dow Jones had the headline pegged at +0.2% expected and the core rate was expected to come in at 0.2%.  The media may be disappointed in that core rate being 0.1% higher than consensus, but this is not exactly simmering inflation.

What is more interesting about this report is that oil prices have come down even since the end of this report and that signals yet another drop in the wholesale inflation rate.  Today’s wholesale data should temper the real consumer inflation expectations in the consumer prices due shortly as well.

There is often a two or three month lag to wholesale inflation passing through to the retail level and the current drop in energy prices implies that the consumer is safe from inflation at least going into the summer.  Even if the consumer price index ticks up it may be considered a blip now.

JON C. OGG

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