Inflation Remains Near Fed Target

Inflation is in the headlines again after the April Consumer Price Index (CPI) accelerated, while the Producer Price Index (PPI) fell versus March readings. Headline CPI, which measures the prices that consumers pay for goods and services, hit 2.5%, whereas the core reading, which removes the impact of food and energy prices, was the same as the March reading at 2.1%. PPI, which measures the wholesale selling prices received by producers*, decelerated to 2.6% and 2.3% for the headline and core figures, respectively.

All three major measures of inflation are near or slightly above the Federal Reserve’s (Fed) 2% target, as our LPL Financial Chart of the Day shows. (April data for personal consumption expenditures (PCE) inflation will be released on May 31.) LPL Research Chief Investment Strategist John Lynch explains, “It’s taken us almost a decade to get here, but inflation is finally near the Fed’s 2% target. We expect that the Fed will continue on its path of gradual rate hikes, and that we’d need to see core PCE or wage inflation move significantly higher before the Fed would become more aggressive and upset the balance that they’ve worked so hard to achieve.”

IMPORTANT DISCLOSURES
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services.
Personal consumption expenditures (PCE) is a measure of price changes in consumer goods and services. Personal consumption expenditures consist of the actual and imputed expenditures of households; the measure includes data pertaining to durables, nondurables, and services. It is essentially a measure of goods and services targeted toward individuals and consumed by individuals.
* Sellers’ and purchasers’ prices may differ due to government subsidies, sales and excise taxes, and distribution costs.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
This research material has been prepared by LPL Financial LLC.
To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.
The investment products sold through LPL Financial are not insured deposits and are not FDIC/NCUA insured. These products are not Bank/Credit Union obligations and are not endorsed, recommended or guaranteed by any Bank/Credit Union or any government agency.  The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.
Member FINRA/SIPC
For Public Use — Tracking #1-729177 (Exp. 05/19)
2018-05-14T11:30:03+00:00 By |Categories: Market Update|