US Producer price inflation for March (PPI) declined 0.5% month-over-month in March (consensus +0.1%) following an upwardly revised 0.0% reading (from -0.1%) in February. Excluding food and energy (core), the PPI index for final demand declined 0.1% month-over-month (consensus +0.2%) following an upwardly revised 0.2% increase (from 0.0%) in February. On a year-over-year basis, the PPI index for final demand was up 2.7% versus 4.9% in February, Core PPI was up 3.4% versus 4.8% in February year over year. The release was in line with a moderating Consumer Price Index we saw yesterday.
In turn that brings back to the fore the Fed’s monetary policy path with month-over-month declines in pipeline measures. Two-thirds of the decline can be attributed to a 1% decrease in prices for final demand goods, namely gasoline (-11.7%). Prices for services edged 0.3% lower, also the largest decline since April of 2020
The Federal Reserve has been on an aggressive path to reducing historically high U.S. inflation, we are a long way from the Central Bank transitory mantra.
March 2023 PPI
US PPI Highlights.
- PPI Final Demand (M/M) Mar: -0.5% (est 0.0%; prev -0.1%)
- PPI Ex Food And Energy (M/M) Mar: -0.1% (est 0.2%; prev 0.0%)
- PPI Final Demand (Y/Y) Mar: 2.7% (est 3.0%; prev 4.6%)
- PPI Ex Food And Energy (Y/Y) Mar: 3.4% (est 3.4%; prev 4.4%)
Where the price falls were:
- Two-thirds of the decline can be attributed to a 1% decrease in prices for final demand goods, namely gasoline (-11.7%).
- The indexes for diesel fuel, residential natural gas, jet fuel, electric power, and fresh and dry vegetables also fell. Meanwhile,
- Prices for services edged 0.3% lower, also the largest decline since April of 2020, mainly due to a 7.3% drop in margins for machinery and vehicle wholesaling.
- The indexes for truck transportation of freight, portfolio management, fuels and lubricants retailing, loan services (partial), and automobiles and automobile parts retailing also moved down.
- Year-on-year, producer prices increased 2.7%, the least since January of 2021 and below expectations of 3%.
- The core rate eased to 3.4% as expected but core prices went down 0.1% mom, beating forecasts of a 0.3% rise.
Where the price rises were:
- All indices were lower
US Core PPI
US March CPI
PPI was released after consumer price data for March. Annual inflation cooled for the eighth straight month on a year-over-year basis, total CPI was up 5.0%, versus up 6.0% in February. That is the smallest 12-month increase since May 2021. However, core-CPI was up 5.6% year-over-year, versus up 5.5% in February. Higher shelter prices (0.6%) offsetting a 3.5% fall in energy cost. Food prices were unchanged.
From the Traders Community News Desk