U.S. Producer Price Growth Accelerates To Record High In March

After yesterday’s report showing a jump in U.S. consumer prices, the Labor Department released a report on Wednesday showing U.S. producer prices also surged in the month of March.

The Labor Department said its producer price index for final demand shot up by 1.4 percent in March after advancing by an upwardly revised 0.9 percent in February.

Economists had expected producer prices to jump by 1.1 percent compared to the 0.8 percent increase originally reported for the previous month.

Energy prices led the way higher, skyrocketing by 5.7 percent during the month, while food prices also spiked by 2.4 percent.

With the bigger than expected monthly increase, the annual rate of producer price growth accelerated to a record high 11.2 percent in March from 10.3 percent in February.

“The severe imbalance between robust demand and handicapped supply will persist throughout Q2, keeping producer price inflation sticky and elevated until price pressures start to decelerate in the latter part of 2022,” said Mahir Rasheed, U.S. Economist at Oxford Economics.

He added, “With a new wave of lockdowns in China and the war in Ukraine raging on, however, risks to the inflation outlook remain firmly to the upside, reaffirming our view that the Fed must proceed with a faster pace of policy normalization in the months ahead.”

Excluding prices for food, energy and trade services, core producer prices still climbed by 0.9 percent in March after edging up by 0.2 percent in February.

The annual rate of growth in core producer prices accelerated to 7.0 percent in March from 6.7 percent in the previous month.

The report showed prices for services advanced by 0.9 percent in March, reflecting a 5.5 percent spike in prices for transportation and warehousing services and a 1.2 percent jump in prices for trade services.

As mentioned above, the Labor Department released a separate report on Tuesday showing consumer prices jumped in the month of March amid a spike in gasoline prices.

The Labor Department said its consumer price index surged by 1.2 percent in March after climbing by 0.8 percent in February. The sharp increase in consumer prices matched economist estimates.

The jump in consumer prices came as gasoline prices skyrocketed by 18.3 percent, accounting for over half of the monthly increase. Food prices also shot up by 1.0 percent.

Meanwhile, the report showed core consumer prices, which exclude food and energy prices, edged up by 0.3 percent in March after rising by 0.5 percent in February. Economists had expected another 0.5 percent increase.

The uptick in core prices reflected an increase in prices for shelter along with higher prices for airline fares, household furnishings and operations, medical care, and motor vehicle insurance.

The annual rate of consumer price growth accelerated to 8.5 percent in March from 7.9 percent in February, showing the fastest growth since December 1981.

Core consumer prices were up 6.5 percent year-over-year in March, reflecting an uptick from the 6.4 percent jump in February. The annual growth represents the biggest increase since August 1982.

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