• US annual Producer Price Index (PPI) dropped to 2.7% in March, down from 4.9% in February.
• Core PPI, excluding volatile items such as food and energy, dropped to 3.4%.
• Slower inflation may signal a less aggressive monetary policy response from the Federal Reserve, potentially leading to a more risk-on environment for investments.
US Annual PPI Slows Down
The US Bureau of Labor Statistics recently reported a decline in the Producer Price Index (PPI) for final demand on a year-over-year basis. The PPI, which measures the average change in selling prices domestic producers receive for their output, decreased to 2.7% in March from 4.9% in February (revised from 4.6%). This development defied market expectations, which had anticipated a reading of 3%. Simultaneously, the annual Core PPI, which excludes volatile items such as food and energy, dropped to 3.4% from 4.5%, aligning with analysts’ predictions. On a month-over-month basis, the PPI and the Core PPI recorded figures of -0.5% and -0.1%, respectively.
Impact on Crypto Market
The crypto market is sensitive to macroeconomic indicators and these lower-than-expected inflation figures may have several implications for crypto investors and traders alike. A slower rate of inflation may signal a less aggressive monetary policy response from the Federal Reserve, potentially leading to a more risk-on environment for investments that could result in positive impact on crypto prices as investors seek out alternative assets such as cryptocurrencies to benefit from potential growth opportunities .
Final Demand Prices Uptick
In March 2023, prices for final demand excluding food & energy experienced a modest uptick of 0.1%, following a 0.2% rise in February over 12 months ending March 2023 saw an index increase of 3.6%. These recent figures offer valuable insight into the stability of the economy by highlighting changes in underlying price pressures facing producers
Less Aggressive Monetary Policy Response
A slower rate of inflation may signal less aggressive monetary policy response from federal reserve that could lead to more risk on environment when it comes investing resulting into positive impact on crypto market as investors seek out alternative assets like cryptocurrencies ,to benefit potential growth opportunities .
Conclusion
The recent slowdown in US annual producer price index has created confusion among investors regarding its impact on crypto market but many experts believe that it can have some beneficial effects like increased investment opportunity due to more risk on environment created by federal reserve’s less aggressive monetary policy responses .