Congratulations to those who want higher inflation. You have it. The US reported a 1% rise in producer prices for March on Friday, doubling the consensus forecast of economists. Prices have risen by 4.2% in the past year, with the price of goods by 7%.
The year-on-year increase is partly due to low, pandemic-induced numbers from 2020. The recent acceleration is also related to restrictions on the supply of goods, while demand increases as the pandemic eases and consumers spend their pent-up money. savings and government checks.
For these reasons, economists from the Federal Reserve say that inflation will be “short-lived” and will decrease later this year as supply constraints ease. Let’s hope they’re right. But the Fed could also underestimate the impact of its wide-open monetary policy, despite an economy that will thrive as the pandemic lock ends and the unemployment rate falls sharply.
The yield on the 10-year treasury note rose to 1.66% on Friday, although it was below the highest point for the day. Investors will look at Tuesday’s consumer price report for more inflation clues. The US has never before pursued government spending and monetary expansion of this magnitude with a hot economy, and the Fed says it will wait until sustainable inflation appears before it changes. Strength.