Financial News: U.S. Producer Prices Increase 0.5% In March, Much

U.S. Producer Prices Increase 0.5% In March, Much Less Than Expected

(RTTNews) - A report released by the Labor Department on Tuesday showed producer prices in the U.S. increased by much less than expected in the month of March.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in March, matching a downwardly revised increase in February.

Economists had expected producer prices to jump by 1.2 percent compared to the 0.7 percent advance originally reported for the previous month.

The report also said the annual rate of growth by producer prices accelerated to 4.0 percent in March from 3.4 percent in February. Economists had expected the pace of growth to surge to 4.6 percent.

"PPI rose at a much slower than expected rate in March, offering Fed officials some comfort the conflict won't spark a sustained inflation shock that could derail their rate cutting hopes," said Nationwide Market Economist Oren Klachkin.

He added, "Looking ahead, we're anticipating a hot PPI report for April, but do not see this evolving into a sustained inflation shock."

The monthly increase in producer prices largely reflected a spike in energy prices, which soared by 8.5 percent in March after jumping by 2.1 percent in February.

Meanwhile, the Labor Department said food prices dipped by 0.3 percent in March after surging by 2.4 percent in the previous month.

The report also said prices for services came in unchanged in March, with a 0.3 percent decrease in prices for trade services offsetting a 1.3 percent jump in prices for transportation and warehousing services and a 0.1 percent uptick in prices for other services.

Core producer prices, which exclude prices for food, energy and trade services, rose by 0.2 percent in March after climbing by 0.5 percent in February.

The annual rate of growth by core producer prices ticked up to 3.6 percent in March from 3.5 percent in the previous month.

A separate report released by the Labor Department last Friday showed consumer prices in the U.S. increased in line with economist estimates in the month of March.

The Labor Department said its consumer price index jumped by 0.9 percent in March after rising by 0.3 percent in February. Economists had expected consumer prices to advance by 0.9 percent.

Excluding food and energy prices, core consumer prices rose by 0.2 in March, matching the uptick seen in February. Core prices were expected to rise by 0.3 percent.

The report said the annual rate of growth by consumer prices accelerated to 3.3 percent in March from 2.4 in February, while the annual rate of growth by core consumer prices ticked up to 2.6 percent in March from 2.5 percent in February.

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