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Inflation modest, but firms' profit margins hurt by struggles to pass on costs:Fed

Published 04/17/2024, 02:30 PM
© Reuters

Investing.com – The economy expanded slightly since late February, and the pace of inflation remained modest over recent months, though continued to dent business profit margins amid struggles to past higher costs onto consumers, according to the Federal Reserve's Beige Book released Wednesday.

The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through Apr. 8, reported that 10 out of 12 districts experienced "either slight or modest economic growth, up from eight in the previous report, while the other two reported no changes in activity."

The improved in economic growth, however, hadn't stoked a faster pace of inflation, the report said, describing the price increases as modest, on average, and "running at about the same pace as in the last report."

Still, the elevated level of inflation continued to hurt business profit margins as their "ability to pass cost increases on to consumers had weakened considerably in recent months," the report said,.

The labor market continue to ease, helping curb wages, the report added, with multiple districts reporting that "annual wage growth rates had recently returned to their historical averages."

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