U.S. PPI Unexpectedly Declines in March While Core Index Is Minimally Changed

The Producer Price Index for final demand fell 0.4% (+2.7% y/y) during March after increasing 0.1% in February, revised from no change and rising an unrevised 0.6% in January according to the Bureau of Labor Statistics (BLS). The March reading compared to a 0.2% rise expected in the Action Economics Forecast Survey. Producer prices excluding food, energy & trade services rose 0.1% (3.4% y/y) after increasing 0.4% in February, revised from 0.2%, after a 0.4% January gain, revised 0.3%. The PPI excluding food & energy eased 0.1% (+3.3% y/y) after rising 0.1% in February, revised from down 0.1%. A 0.3% increase had been expected.

Energy prices declined 4.0% (-6.7% y/y) during March, after falling 1.3% in February. Gasoline costs fell 11.1% (-16.5% y/y) after falling 4.5% while home heating oil prices declined 5.5% (-14.4% y/y) after a 9.8% February drop. Electric power prices rose 0.7% (1.1% y/y) in March following a 0.4% February gain and natural gas costs strengthened 2.1% (9.8% y/y) following a 1.3% rise. Diesel fuel prices declined 6.1% (-25.2% y/y) after a 3.8% slump.

Final demand food prices declined 2.1% (+3.7% y/y) in March after rising 1.8% in February. Egg prices weakened 21.3% (+165.4% y/y) last month following a 28.1% increase. Prices for fresh and dry vegetables fell 7.7% (-33.3% y/y) after rising 6.0% in February. Beef & veal prices declined 6.3% (+1.6% y/y) after falling 1.8% while dairy product prices fell 1.2% (+3.7% y/y) in March after a 0.1% uptick during February.

Final demand goods prices excluding food & energy rose 0.3% (2.4% y/y) in March, the same as in February. Core finished consumer goods prices rose 0.1% (2.1% y/y) after a 0.4% February rise. Core nondurable goods prices edged 0.1% higher (2.4% y/y) last month after rising 0.5% in February. Durable consumer goods prices improved 0.3% (1.7% y/y), after moving 0.2% higher in February. Capital equipment prices rose 0.3% (2.6% y/y) last month following a 0.2% gain. Core government-purchased goods prices rose 0.3% (2.5% y/y) in March, after a 0.2% February increase.

Final demand services prices declined 0.2% (+3.6% y/y) last month after holding steady in February. Trade services prices fell 0.7% (+3.1% y/y) last month following a 1.1% decline. Trade of finished goods prices declined 0.8% (+2.8% y/y) and added to a 1.2% February decline. Prices for final demand transportation and warehousing services weakened 0.6% (+1.8% y/y) in March, after improving 0.1% in February. Services prices less these costs rose 0.1% (4.0% y/y) last month, after a rise of 0.5% in February.

Construction costs increased 0.5% (2.3% y/y) in March, after slipping 0.1% in February.

Prices for intermediate demand of processed goods held steady (0.9% y/y) following a 0.4% rise. Processed energy goods prices fell 3.2% last month after increasing 0.2% in February, while food prices slipped 0.5% following a 2.2% February gain.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s USECON database. Further detail is contained in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

The Minutes to the latest FOMC meeting are available here.