Producer Prices: Core Trend Accelerates Higher

Bottom Line: While much less reliable than tomorrow's CPI report as an inflation gauge, PPI came in a touch faster than expected at both the core and headline level in March. Energy prices continue to drive the headline, dropping 2.1% after slipping 0.5% in February, while final demand services rose slightly. Core prices are showing a modest acceleration in trend, rising 3.6% annualized over the last 3 months versus 2.7% over the last 12 months. The PPI ROSE by 0.3% in March, compared with market expectations for an increase of 0.1%. Overall producer prices are 3.0% ABOVE the year ago level. The Goods PPI ROSE by 0.3% in March and is now 3.3% ABOVE its year ago level. Food prices rose by 2.2% and are now 2.1% ABOVE their year ago level. Meanwhile energy prices fell by 2.1%. but are now 8.5% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.3%, and is now 2.1% ABOVE its year ago level. The Services PPI ROSE by 0.3% in March and is now 2.8% ABOVE its year ago level. The Core PPI ROSE by 0.3%, compared with market expectations for a increase of 0.2%. Core producer prices are now 2.7% ABOVE their year ago level.