Mortgages Blog

Finance Blogs » Mortgages Blog » Wholesale prices advance faster than expected in April

Wholesale prices advance faster than expected in April

By Holden Lewis ·
Tuesday, May 18, 2010
Posted: 9 am ET

Wholesale prices rose faster than expected in April. This might not be enough to force an increase in mortgage rates, but it's something to be concerned about.

The core Producer Price Index rose by 0.2 percent in April, according to the Department of Labor. The consensus prediction had been a rise of 0.1 percent. With wholesale inflation higher than expected, mortgage rates are more likely to rise than to fall today. But a rate rise isn't a sure thing.

Wednesday brings the more influential Consumer Price Index. If the CPI rate is higher than expected, don't be surprised if mortgage rates rise. With today's bigger-than-expected increase in PPI, it wouldn't be surprising if tomorrow delivers a bigger-than-expected increase in CPI.

Note that when I say the core PPI went up 0.2 percent, I'm talking about the core rate, which excludes food and fuel. When you include those two volatile sectors of the economy, wholesale prices actually declined in April, by 0.1 percent. That's because wholesale energy prices fell 0.8 percent in April, and wholesale food prices fell 0.2 percent. One oil spill, or a flood in a farming region, could reverse those declines quickly. Because food and fuel prices tend to rise and fall from month to month, policymakers tend to bestow those items with less import when measuring inflation.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.