Inflation fell to 4.6% in February in producer price index
Zachary Halaschak
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Inflation plunged to a 4.6% annual rate in February, as measured by the producer price index.
The decline in the wholesale price index reported Wednesday morning by the Bureau of Economic Analysis shows that inflationary pressures are abating in the face of the Federal Reserve’s campaign to slow economywide spending by hiking interest rates.
Nevertheless, inflation is still running much hotter than the central bank’s target and dinging household purchasing power.
Prices paid by producers eventually translate to prices paid by households.
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The Fed’s target for inflation is 2%.
The high inflation of the past two years has battered household purchasing power and undercut support for President Joe Biden’s economic agenda.
Wednesday’s PPI report comes a day after the consumer price index, which is even more closely watched, was released.
Annual inflation fell to 6% after it had been running at 6.4% the month before. The annual inflation has been trending down since it hit a whopping 9.1% in June. Still, though, recent month-to-month price gains have been high, suggesting that the Fed’s efforts still have not succeeded in taming inflation.
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The inflation data come after the Federal Deposit Insurance Corporation announced on Friday that Silicon Valley Bank, known as SVB, had failed and been taken into government hands, followed by crypto lender Signature Bank on Sunday. Officials provided reassurances over the weekend that the banking system was sound.
The Fed will meet next week to decide whether to raise interest rates, although there are mixed opinions on if the central bank should hike rates at all following SVB’s collapse and, if so, by how much.