Market Watch: CPI Rises, PPI Dips, Supply Chain Shaken

Wholesale 2

Market Watch: CPI Rises, PPI Dips, Supply Chain Shaken

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Mixed Signals - CPI Rises

The Consumer Price Index (CPI) rose 0.3% in December, higher than the 0.2% estimates. When looking at Core CPI, which excludes food and energy, it rose 0.3% on the month and 3.9% from a year ago. This was in line with analysts expectations. The increase in December was mostly from the increased cost of housing. The rise in CPI is going to be an issue for the Fed as they continue to fight inflation and may have to adjust their plans to cut rates at some point in 2024.

Wholesale Prices Fall

The Producer Price Index (PPI), which measures wholesale prices, fell 0.1% in December. The PPI was up just 1% on the year. This was a bright spot on the inflation front, signaling inflation continues to cool in most areas. When you remove the more volatile measures such as food and energy, which is called the Core Produce Price Index, it was up 0.2% on the month, in line with estimates. PPI and Core PPI are generally considered a better leading indicator for inflation. It represents the prices companies are paying for these goods and services, which trickles down to the consumer prices.

Red Sea Shipping Hits Global Supply Chains

Auto manufacturers Tesla and Volvo have suspended some production in their European factories, citing supply issues with shortages of components. This is a result of the Houthi attacks on shipping containers in the Red Sea. Last Thursday, the U.S. and Britain launched a series of attacks on Yemen, aiming at the Iranian-backed militia group. Container shipping rates continue to spike as there is a growing concern global container ships will have to continue to avoid the Suez Canal for longer than anticipated. This is the fastest route from Asia to Europe and is now being avoided by major shipping companies.

  • Alex Wolfe

    Alex is a Certified Financial Planner™. He brings nearly a decade of experience working with individuals, families, and business owners. Prior to working for Base Wealth Management, Alex worked for Fidelity Investments and an independent wealth management firm in Venice, FL. Through many years of practice, he specializes in helping clients navigate their financial goals through comprehensive financial planning. He received his bachelor’s degree in economics from Texas A&M University.

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