March PPI Shows Underlying Price Pressures

U.S. wholesale prices accelerated further during March, and while the monthly rise was less than expected, it illustrates lingering inflation that could further delay long-awaited Federal interest rate cuts.

The U.S. Bureau of Labor Statistics released its monthly Producer Price Index (PPI) report on April 11, which showed that the March index for total final demand was up 0.2% month-to-month and 2.1% year-over-year  — less than the respective 0.3% and 2.3% increases estimates from Dow Jones and FactSet. 

The PPI tracks average price shifts at the wholesale level before they reach consumers.

The annual increase was its largest since 2.3% in April 2023.

It followed a February that had increases of 0.6% month-to-month and 1.6% year-over-year.

Driving March’s monthly increase was a 0.3% rise in prices for final demand services, while the index for final demand goods ticked down 0.1%. Core inflation — which removes volatile indexes of food, energy and trade services — increased 0.2% in March after a 0.3% increase in February, and increased 2.8% year-over-year.

The PPI report came a day after the Bureau’s Consumer Price Index increased 0.4% month-to-month during March and 3.5% year-over-year — exceeding consensus expectations. The indexes for shelter and gasoline combined to contribute over half of the monthly increase in the all items index.

Core consumer inflation — which omits volatile food and energy indexes — increased 0.4% in March month-to-month.

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