The prices received by manufacturers of goods and services rose in March at the fastest pace since records were kept, the Bureau of Labor Statistics reported on Wednesday.
The producer price index, which measures prices paid by wholesalers, rose 11.2% from a year ago, mostly in a data series dating back to November 2010. On a monthly basis, the meter rose 1.4%, above 1.1% Dow Jones estimate and also a record.
By eliminating food, energy and trade services, the so-called core PPI increased 0.9% on a monthly basis, almost double the 0.5% estimate and the largest monthly increase since January 2021. Core PPI increased 7% on an annual basis.
The PPI is seen as a forward-looking inflation target as it tracks prices in the pipeline for goods and services that ultimately reach consumers.
Wednesday’s release comes the day after the BLS reported that the consumer price index for March rose 8.5% over the past year, above expectations and the highest reading since December 1981.
On the producer side, prices of final demand goods led with a monthly increase of 2.3%, while service prices rose 0.9%, which is a marked increase from the increase of 0.3% in February. Commodity inflation has surpassed services during the Covid pandemic, but March figures indicate that services are now catching up as consumer demand shifts.
Energy prices were the biggest increase for the month with an increase of 5.7% while food costs increased 2.4%.
Rising inflation has led the Federal Reserve to start tightening monetary policy.
In March, the Fed raised its key short-term borrowing rate by 0.25 percentage points as the first step in what is expected to be a series of increases throughout the year. The markets price an almost certain guarantee that the central bank will double this move at the meeting in May and will continue until the Fed funds rate reaches around 2.5% by the end of the year.
Markets initially did not react to the PPI news, with stock market futures hovering around flat and government interest rates not changing much either.