Breaking: US PPI Inflation Surges In January; Bitcoin Prices Steady

The US PPI inflation data released by the Bureau of Labor Statistics on Friday showed that wholesale inflation experienced a resurgence in January. The PPI index, which gauges the price at which raw materials are sold on the open market, increased by 0.3% during the month. The resurgence was contrary to the 0.1% fall in December and higher than the market expectation.

US PPI surges in January

The Producer Price Index for final demand increased 0.3 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. On an unadjusted basis, the index for final demand rose 0.9 percent for the 12 months ended January 2024.

Market on average had expected the PPI inflation to increase 0.1% month-on-month while slipping down to 0.6% as compared to the previous year. The higher-than-expected inflation rise can be attributed to a rise in prices for final demand services, according to government data. In January, US producer inflation fell less sharply than anticipated.

As a gauge of wholesale inflation, market participants keep a careful eye on the PPI inflation data. It is considered a leading indicator since producers usually pass higher pricing through to their clients. The Federal Reserve, which is still debating on the trajectory of rate cuts, views the PPI announcement as particularly significant.

The PPI inflation data also comes after the CPI data has already dented sentiments. Data previously showed that the Consumer Price Index increased 0.3% in January on a seasonally adjusted basis, after rising 0.2% in December. The CPI number, which missed market expectations, swapped bets on the Fed cutting rates in July, from an earlier expectation of June.

Impact on crypto markets

The Federal Reserve’s rate decisions have long been a crucial tool for investors to assess assets. Lower interest rates frequently devalue government securities, which increases the attraction of assets like cryptocurrencies.

So far, Bitcoin has shown good resilience to the developing macro conditions and inflationary pressure. The BTC price has shown subdued volatility and is currently holding just above the $52,000 level. Right after the release of the PPI inflation data, Bitcoin prices were largely steady. At the time of writing, the OG-crypto currency stood at $52,185.12 a piece, up 0.02% in the last 24 hours.

However, as we approach the Bitcoin halving, the next few months could be crucial from a volatility point of view.

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