Economists polled by Reuters had expected the PPI to remain unchanged for the month and rise 3.0% year-on-year.
The US government reported on Wednesday that overall consumer prices barely rose in March. And while core inflation remained strong, rents rose at their slowest pace in nearly a year.
Next interest rate hike
Financial markets are betting the Federal Reserve will raise interest rates another 25 basis points at its May 2-3 policy meeting, according to CME Group’s FedWatch tool. That will likely be the last hike in the Fed’s fastest monetary tightening campaign since the late 1980s.
Last month, the Fed raised its benchmark overnight interest rate by a quarter of a percentage point, but signaled it was about to halt the hikes in a nod to turmoil in financial markets. Since March of last year, the official interest rate has risen 475 basis points, from a level close to zero to the current 4.75%-5.00%.
Two-thirds of the PPI drop last month was due to a 1.0% decline in goods prices. Goods prices fell 0.3% in February. Gasoline prices decreased 11.7% last month.
The prices of diesel, natural gas for residential use and electricity also fell. Gasoline values are set to rebound after Saudi Arabia and other OPEC+ oil producers announced further crude production cuts this month.
Food prices rebounded 0.6%. Excluding the volatile food and energy components, core goods prices advanced 0.3%, after a similar rise in February. Services prices fell 0.3%, the biggest decline since April 2020. There was a 0.9% drop in the margins of final demand commercial services. The cost of transportation and storage services fell 1.3%.
Excluding the components of food, energy and commercial services, producer prices rose 0.1% in March. Core PPI rose 0.2% in February. In the 12 months to March, the core PPI gained 3.6% after rising 4.5% in February.
