The prices that producers of goods and services receive rose at an all-time high in March, the Bureau of Labor Statistics reported on Wednesday.
The Producer Price Index, which measures prices paid by wholesalers, rose 11.2% year-on-year, the strongest in a series of data dating back to November 2010. On a monthly basis, the index was up 1.4%, ahead of the Dow Jones’ 1.1% estimate and also a record.
Excluding food, energy and trade services, the so-called core PPI rose 0.9% on a monthly basis, almost double the estimate of 0.5% and the largest monthly gain since January 2021. The core PPI rose 7% on a year-on-year basis % .
The PPI is considered a forward-looking measure of inflation because it tracks prices in the pipeline for goods and services that eventually reach consumers.
Wednesday’s release comes the day after the BLS reported that the consumer price index for March rose 8.5% last year, above expectations and the highest since December 1981.
On the producer side, final consumer goods prices led the way with a monthly increase of 2.3%, while services prices rose 0.9%, up sharply from February’s 0.3% rise. Goods inflation has outperformed services during the Covid pandemic, but March figures suggest services are now catching up as consumer demand shifts.
Energy prices were the month’s biggest gainers, rising 5.7%, while food costs rose 2.4%.
Rising inflation has prompted the Federal Reserve to start tightening monetary policy.
In March, the Fed raised its benchmark short-term lending rate by 0.25 percentage point, the first in a series of rate hikes expected throughout the year. Markets are almost certainly pricing in that the central bank will double that move at its May meeting and continue until the fed funds rate hits about 2.5% by the end of the year.
Markets initially showed no reaction to the PPI news, stock market futures hovered around flat and government bond yields were also little changed.