The Day at a Glance | March 15 2022

The Top

*Inflation for producers reached an annual 10% during February in the United States, in line with estimates.

*China`s economy grew more than expected in the first two months of 2022; there is risk of a slowdown due to COVID-19.

*Russia faces deadline for 117 million dollars in interest payments (150 billion USD); it has a 30 day grace period in order to avoid default if the payment is not made.

Economic environment

Inflation for producers continues to increase in the United States. The Producer Price Index accelerated to an annual 10% rate during February, sign that inflationary pressures in the country persist. Month to month, prices increased 0.8%, slightly below the estimated 0.9%. Prices logged their largest monthly increase since 2009 (1.4%), and were boosted by energy costs (5.6%). Production costs are expected to continue increasing as raw material prices are affected by the Russia-Ukraine conflict and new waves of the COVID-19 virus in China, which are causing production chain issues. The higher costs for producers could be passed onto final consumers, which is why risks of more persistent inflationary pressures could be seen. Nevertheless, there were signs of stabilization in some prices. Underlying inflation for producers increased 0.2% in February and set at an annual 8.4%, with services logging their lowest monthly increase (0.3%) since December of 2020. The data maintains expectations of the Federal Reserve increasing interest rates in 25 base points in its meeting tomorrow.

Growth in China surprised to the upside. Growth data in China for the January-February 2022 period surprised to the upside, a sign that the country`s economy could have started to recover from its strong slowdown logged at the end of 2021. Industrial production increased 7.5% annual, retail sales grew 6.7% and investment expanded 12.2%. Unemployment increased to 5.5%, even though this is explained by seasonality effects. China`s fiscal and monetary policy seem to be having an effect on growth and confidence among economic agents at the start of 2022. However, the economy must still face important challenges regarding growth despite the strong start in 2022: A new wave of the virus has forced new quarantine measures in March, the real-estate sector`s crisis still hasn’t been overcome, and global demand for Chinese exports is expected to slow down in 2022.