Analysis: Market expectations are overly focused on crude oil, with the US March PPI significantly below expectations

Crypto news, Investinglive analyst Adam Button states that the overall and core PPI in March in the United States both fell far below market expectations on an annual and monthly basis. Considering that market forecasts mainly centered around the expected surge in energy prices, the focus is on where the deviation lies. Although energy prices did indeed rise significantly, the increase was less than expected: refined oil surged (gasoline +15.7%, diesel +42.0%, etc.), but natural gas plummeted 51.7%, partially offsetting the overall impact. The service sector unexpectedly remained flat (month-over-month 0.0%), which accounts for about 68% of the data and is the main reason for the underperformance. One driving factor is the decline in trade profit margins, with retailers absorbing some energy costs rather than passing them on. Transportation prices increased by 1.3%, but with only a 5% weight, it was insufficient to fill the gap. Food prices fell 0.3%, also dragging down the overall data. In short, the market’s over-focus on crude oil underestimated three factors: the sharp decline in natural gas, the compression of trade profit margins, and the slowdown in core service inflation. The energy transmission effect does exist but is narrower in scope, while pricing power in other parts of the economy has weakened. (Jin10)