Consequence of inflation | Weekly Excerpt April 17

This week's economic data resulted in mixed results. Inflation and employment data set the tone for the market. Inflationary data for both consumption and production came in better than expected, but on the other hand, jobless claims came in higher than expected. This could allay concerns that the Fed will act aggressively when it meets in early May on interest rates. 

Inflationary Data

In contrast to predictions of a 3% increase, producer prices rose by 2.7% in 1Q2023. In the same vein, the consumer price index for March was also lower than anticipated on Wednesday. CPI decelerated in March to +5.0% (YoY) from February's 6.0%. The figure expected by analysts was +5.1%. Core inflation rate rose to +5.6% (in line with expectations) vs. 5.5% in Feb. 

Overall, we are seeing a significant slowdown, but we cannot fail to mention that we are seeing some divergence between the two benchmarks.

After instability in the financial industry last month, officials expressed alarm about a possible recession, and the Fed then released the minutes of its March meeting. But once again the 3 major US indices posted weekly gains.

For now, the Fed is expected to raise rates by a quarter of a percentage point in May. Another noteworthy data point is that retail sales fell more than expected by 11TDP3Q in March compared to the previous month. This is likely due to consumers spending less on automobiles and other big-ticket items as a result of the impact on purchasing power.