Wholesale inflation sees huge drop

The Labor Department’s producer price index, which measures the prices that businesses pay to each other, rose just 2.7 percent annually in March, the lowest reading since January 2021.

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That’s a significant decrease from the previous month’s 4.9 percent annual inflation rate.    Wholesale prices fell 0.5 percent from February to March. Analysts had expected inflation to remain flat, rather than drop.   It’s one of the surest signs yet that inflation is cooling rapidly and that an economic downturn could soon follow. When prices drop too fast, it means demand has plummeted.    “All the signs have aligned for a recession to begin in the second half of the year as our forecast has suggested. While disinflation will continue, the path will be bumpy,” Tuan Nguyen, U.S. economist at RSM, wrote in a note.    Cheaper wholesale prices should translate into lower sticker prices for consumers in the coming months. Large corporations that have profited from inflation may be reluctant to lower prices, but in some cases a demand slowdown could leave them with no choice.     The new data follows Wednesday figures showing that the annual inflation rate for consumers dipped to 5 percent in March, down from 6 percent the month prior. The cost of groceries finally came down after months of persistent price hikes.    White House press secretary Karine Jean-Pierre cheered the news Thursday, referring to the reports as “important progress for our economy and for American families.