U.S. headline producer prices rise surprisingly in March, implies modest rise in pipeline price pressures

U.S. producer prices surprised to the upside in March. The headline PPI rose 0.3 percent sequentially, slightly higher than consensus expectations. Meanwhile, core level rose 0.2 percent sequentially, a tenth higher than projected.

The rise in headline figure was mainly because of food prices that rose strongly by 2.2 percent, following three straight months of decline. At the core level, strength was widespread throughout subcategories. Stripping, energy, food and trade, PPI came in at 0.4 percent for the third straight month.

On a year-on-year basis, PPI rose 3 percent, while the core rate rose 2.7 percent. Overall, today’s report implies modestly stronger pipeline pressures comparative to what was expected, noted Barclays in a research report.

Delving into details, strength in services PPI extended for the third consecutive month, with prices rising strongly by 0.3 percent, driven by transportation and warehousing services. Trade services recovered modestly, rising 0.2 percent in March. In the meantime, the categories of PPI related to healthcare services were flat to modestly higher in March. Personal consumption PPI rose 0.1 percent sequentially. Stripping food & energy, personal consumption PPI rose 0.1 percent and is widely in line with the core CPI forecast for March, stated Barclays.

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