PPI Comes in Below Market Expectations

• US data releases were mixed, with headline PPI and core readings falling short of expectations, but several key PPI components feeding into core PCE inflation rose sharply.
• Hospital PPI prices increased by 0.6%, recovering from an unusually low 0.2% rise in January, while auto insurance PPI surged 1.2% and domestic air transport prices rose 1.0% in unadjusted terms.
• Final demand goods prices increased by 0.3%, marking the fifth consecutive monthly rise, contributing to persistent inflation pressures.
• A 1.7% jump in final demand food prices drove the increase, with significant price spikes in chicken eggs adding to cost pressures.
• Despite softer headline figures, underlying inflation risks remain, reinforcing expectations that the Fed will remain cautious before committing to rate cuts.