March 2018 Producer Price Index

Price increases hastened in March 2018 for producers and wholesalers according to the Bureau of Labor Statistic’s Producer Price Index which accelerated to 0.3 percent versus 0.2 percent in February.  The headline’s year-over-year number moved faster too, rising from 2.8 percent to 3.0 percent.  Stripping out food and energy, the core-PPI tallies also accelerated as the monthly number reached 0.3 percent (up from 0.2 percent) and the year-over-year statistic reached 2.7 percent (up from 2.5 percent).  But some relief may be seen coming down the pike.

Prices in the two earlier stages of goods dropped.  Processed goods for intermediate demand declined 0.3 percent, falling for the first time since last July; energy led the drop.  Likewise, unprocessed goods for intermediate demand collapsed 4.8 percent.  Energy led here as well with a steep decrease of 11.6 percent.  Despite monthly setbacks, both of these goods categories remained positive year-on-year.

Services for intermediate demand managed another uptick.  Continuing its long string of increases, it rose 0.3 percent and is up 3.2 percent over the past year.  Margins received between wholesalers and retailers led this portion of the indicator higher in March.

Inflation still has an upward trajectory, but this indicator suggests price increases continue falling short of the explicit target set by the Federal Reserve.  Even though the headline rate of change hit 3.0 percent in this iteration, it has been higher as recently as November 2017.  Of course, Atlas follows other indicators of inflation as well, so we will let you know if something more noteworthy appears regarding accelerating inflation in those releases and the possibility of more aggressive action from the Federal Reserve as a consequence.