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Producer Prices: Moderate in March

April 13, 2017
Bottom Line: Producer inflation fell in March as base effects due to oil start to nudge inflation metrics lower (base effects from oil being near its lows in January and February of 2016 pushed up annual rates of change through February of this year). Core prices were unchanged, less than expected, and up 1.6% versus a year ago. This is in-line with 2016's pace but still well above the pace of 2015. Overall, producer price inflation is moderating again.

The PPI FELL by 0.1% in March, compared with market expectations for in line of 0.0%.Year-over-year producer inflation peaked in June 2011 at 4.44%, then moved with energy price (bottoming in late '15 / early '16 and rising sharply until early '17 due to base effects). Overall producer prices are 2.3% ABOVE the year ago level.

The Goods PPI FELL by 0.1% in March but is now 4.0% ABOVE its year ago level. Food prices rose by 0.9% and are now 0.3% ABOVE their year ago level. Meanwhile energy prices fell by 2.9%. but are now 15.3% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.4%, and is now 2.3% ABOVE its year ago level.

The Services PPI FELL by 0.1% in March but is now 1.5% ABOVE its year ago level.

The Core PPI was UNCHANGED, compared with market expectations for a increase of 0.2%. Core producer prices are now 1.6% ABOVE their year ago level.