U.S. Producer prices increased from the most in five months in March, but underlying wholesale inflation was tame. The Labor Department said on Thursday its producer price index for final demand increased 0.6 percent last month, raised to a spike in the expense of gasoline. Which was the biggest increase since last October and followed a 0.1% gain in February. In the twelve months through March, the PPI rose 2.2 percent following advancing 1.9 percent in February. Economists polled by Reuters had forecast the PPI would climb 0.3 percent in March and an increase 1.9 percent on a year-on-year basis.
A key indicator of underlying producer price pressures that excludes food, energy and trade services was unchanged last month after picking up 0.1% in February. The so-called core PPI increased 2.0 percent in the twelve months through March. Which was the lowest Annual growth since August 2017 and followed a 2.3 percent increase in February. Data on Wednesday showed consumer prices rose by the most in 14 months in March, driven by expensive gasoline. But core inflation remained muted amid a plunge in the price of apparel. Slowing domestic and growth are keeping inflation contained. Salary inflation has also been moderate even though a labor market that is tight.
Minutes of the Federal Reserve’s March 19-20 policy meeting printed on Wednesday described inflation as muted, although officials anticipated to rise to or close to the U.S. Central bank’s 2% target. The Fed’s preferred inflation measure, the core personal consumption expenditures price index, is currently at 1.8 percent. Last month, wholesale energy costs jumped 5.6 percent, with gasoline prices popping up 16.0 percent, the most since August 2009. Energy costs rose 1.8% in February. Gasoline accounted for more than 60% of the 1.0 percent increase in goods prices last month. Goods prices increased by 0.4 percent in February. Wholesale food costs rose 0.3 percent in March, reversing a 0.3 percent fall in the previous month.
Core goods prices rose 0.2 percent after slightly increasing by 0.1% in February. The price of services increased by 0.3 percent in March after being unchanged in the previous month. Costs for health care services fell 0.2 percent last month. There was a sharp fall at the expense of hospital outpatient services. Those health care costs fall into the core of the PCE price index.