PPI Rises 0.5% in March, Undershoots Expectations

The Producer Price Index (PPI) increased 0.5% month-over-month in March, the U.S. Bureau of Labor Statistics reported, coming in well below the 1.2% consensus estimate and matching February’s revised 0.5% gain. On an annual basis, producer inflation rose 4.0%, also undershooting expectations of 4.7% and accelerating from 3.4% in the prior month.

Core PPI, which excludes food and energy, showed more muted momentum. The index increased just 0.1% month-over-month, compared to a 0.5% consensus forecast and a revised 0.3% gain in February. Year-over-year, core PPI rose 3.8%, in line with the prior month but below expectations of 4.2%. 

The headline increase was driven entirely by goods inflation. Final demand goods prices rose 1.6%, the largest monthly gain since August 2023, while services prices were unchanged, pointing to a divergence between commodity-linked inflation and service-sector stability. 

Energy played a central role in the upside. Prices for final demand energy surged 8.5% in March, accounting for the bulk of the increase and reinforcing the volatility tied to commodity markets. 

Meanwhile, the index for final demand less foods, energy, and trade services rose 0.2% in March, down from 0.5% in February. On a yearly basis, this measure increased 3.6%, suggesting some moderation in core inflation trends despite elevated headline readings.