U.S. producer price. unexpectedly fell in March following lower gasoline prices and signs that underlying producer inflation is easing.
The producer price index for final demand fell 0.5% last month, the Labor Department reported on Thursday. Data for February was revised to show PPI unchanged instead of slipping 0.1% as previously reported.
In the 12 months to March, the HIPR rose 2.7%. That was the smallest year-on-year increase since January 2021 and followed a 4.9% increase in February. The annual HIPR rate is decreasing because last year's big increase was dropped from the calculation.
Economists polled by Reuters had forecast PPI unchanged in the month and up 3.0% year-on-year.
The government reported on Wednesday that overall consumer prices barely rose in March. While core inflation remains high, rents are rising at their slowest rate in nearly a year.
Financial markets are betting that the Federal Reserve will raise rates by another 25 basis points at its May 2-3 policy meeting, according to CME Group's FedWatch tool. That would likely be the last rate hike in the Fed's fastest monetary policy tightening campaign since the late 1980s.
The Fed last month raised its benchmark overnight interest rate by a quarter of a percentage point, but indicated it was on the verge of halting further rate hikes in a sign of financial market turmoil. The Fed has raised its policy rate by 475 basis points since last March from near zero to the current 4.75%-5.00% range.
A 1.0% decline in goods prices accounted for two-thirds of the decline in last month's CPI. Goods prices fell 0.3% in February. Petrol prices plunged 11.7% last month.
Food prices rebounded 0.6%. Excluding volatile food and energy components, core goods prices rose 0.3% after a similar increase in February. Prices for services fell 0.3%, the biggest decline since April 2020. There was a 0.9% decline in margins for end-demand trade services. The cost of transportation and warehousing services fell 1.3%.
Excluding food, energy and trade services components, producer prices rose 0.1% in March. The core HIPR rose 0.2% in February. In the 12 months to March, core PPI rose 3.6% after rising 4.5% in February.
