Producer Price Index Accelerates to 4.0% Year-Over-Year in March, Marking Third Consecutive Month of High Monthly Gains

The Producer Price Index for final demand rose 4.0% in March compared to a year ago, the highest annual rate since February 2023. On a month-to-month basis, seasonally adjusted, the overall PPI increased by 0.51%, equivalent to a 6.3% annualized rate. This follows similarly elevated monthly jumps of 6.1% and 6.8% annualized in February and January, respectively, according to data released by the Bureau of Labor Statistics. A significant 8.5% spike in energy prices during March, which annualizes to 165%, contributed to an 11.2% year-over-year increase for the energy component, reversing a prior monthly decline. However, the overall monthly increase was moderated by a 0.27% drop in food prices and a near-flat reading for services, which constitutes 68% of the total index. The services PPI edged up just 0.05% month-to-month in March, a sharp slowdown after three consecutive larger increases. Within services, trade services declined 0.3% for the second month, while transportation and warehousing services spiked 1.3%. The core PPI, excluding food and energy, rose a modest 0.09% month-to-month in March. Year-over-year, the core PPI decelerated slightly to 3.75%. Since mid-2020, the services PPI has increased by 28%, and the food PPI is up 33% from that period.