Produce Price Inflation Jumps Over 11%

The inflation data continues to get worse as the price producers pay for goods came in hotter than expected, according to March’s Producer Price Index…(BLS)

• Y-O-Y: The Producer Price Index for final demand jumped to 11.2% in March, the largest increase since 2010 and up from the 10.3% reported in February.

• M-O-M: The PPI was up 1.4% from just February. This rise followed advances of 0.9% in February and 1.2% in January.

HOTTER THAN EXPECTED: Economists had projected smaller increases for both annual and monthly inflation at 10.6% and 1.1%, respectively.

Goods continue to be the biggest upward pressure on prices as final demand for goods was up 2.3% month-over-month.

• Energy continues to push costs upward as producer prices increased 5.7% in March and food costs were up 2.4% month-over-month.

Service costs jumped back up to December and January levels with a 0.9% month-over-month increase after a smaller 0.3% rise in February.

Liz Young, Head of Investment Strategy at SoFi, had a good point about the spread between producer and consumer prices…

• “There’s a gap and that gap gets closed somehow. Either it eats into profit margins or it gets passed through. Cautionary tone by CEOs likely to continue until this force fades.”