(Kitco News) – Peak inflation premature; gold price rising as U.S. PPI hits new record, rising 11.2% annually in March
Gold prices are seeing further upside momentum as Tuesday calls for peak inflation might be premature after producers saw another record rise in price pressures.
Wednesday, the U.S. Labor Department said its Producer Price Index (PPI) rose 1.4% in March following February’s rise of 0.9%; the data was stronger than expected, with economists forecasting an increase of 1.1%.
The report said that annual inflation rose 11.2%, another new record high for the data set.
The gold market is seeing new momentum following the latest producer inflation data. June gold futures last traded at $1,981.80 an ounce, up 0.28% on the day.
Economists pay close attention to producer prices as it is a leading indicator of consumer prices. Traditionally, companies pass on higher costs to their customers.
Core PPI, which strips out volatile food and energy costs, rose 0.9% last month, following February’s 0.2% rise. Economists were expecting to see a 0.5% rise.
The report said that annual core inflation rose 7.0% last month.
According to some economists, the rise in producer prices while above expectations is also not surprising as energy prices and the broad commodity market saw massive price moves last month as Russia waged its war against Ukraine, significantly disrupting global supply chains.
The report said that Over half of the broad-based advance in March is related to rising energy costs, with final demand for energy rising 5.7%.
Economists noted that it will take some time for rising producer prices to make their way to consumers, which could keep inflation pressures elevated longer than expected.