Inquiring minds are diving into the BLS Producer Price Report for hints of inflation pressure.
The Producer Price Index for final demand rose 0.6 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices edged up 0.1 percent in February and decreased 0.1 percent in January. On an unadjusted basis, the final demand index increased 2.2 percent for the 12 months ended in March, the largest 12-month rise since a 2.5-percent advance in December 2018.
In March, over 60 percent of the increase in the index for final demand can be traced to a 1.0-percent advance in prices for final demand goods. The index for final demand services moved up 0.3 percent.
The index for final demand less foods, energy, and trade services was unchanged in March following a 0.1-percent advance in February. For the 12 months ended in March, prices for final demand less foods, energy, and trade services rose 2.0 percent.
Final Demand Goods
The index for final demand goods moved up 1.0 percent in March, the largest advance since a 1.0-percent rise in May 2015. In March, over 80 percent of the broad-based increase can be traced to prices for final demand energy, which jumped 5.6 percent. The index for final demand goods less foods and energy rose 0.2 percent. Prices for final demand foods advanced 0.3 percent.
Over 60 percent of the increase in the index for final demand goods is attributable to a 16.0-percent jump in gasoline prices. The indexes for diesel fuel, fresh and dry vegetables, cigarettes, beverages and beverage materials, and residential electric power also moved higher. In contrast, prices for pork declined 8.7 percent. The indexes for light motor trucks and liquefied petroleum gas also decreased.
Final Demand Services
Prices for final demand services rose 0.3 percent in March after no change in February. The increase is attributable to the index for final demand trade services, which advanced 1.1 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Conversely, prices for final demand transportation and warehousing services declined 0.8 percent. The index for final demand less trade, transportation, and warehousing was unchanged.
Nearly a third of the increase in the index for final demand services can be traced to margins for apparel, jewelry, footwear, and accessories retailing, which rose 4.2 percent. The indexes for machinery, equipment, parts, and supplies wholesaling; deposit services (partial); food and alcohol retailing; health, beauty, and optical goods retailing; and portfolio management also advanced. In contrast, prices for long distance motor carrying fell 1.2 percent. The indexes for fuels and lubricants retailing and for residential real estate loans (partial) also declined.
Mike "Mish" Shedlock