U.S. Producer Price Growth Exceeds Estimates Amid Spike In Energy Prices
(RTTNews) - A report released by the Labor Department on Thursday showed a spike in energy prices contributed to a bigger than expected increase in U.S. producer prices in the month of March.
The Labor Department said its producer price index for final demand climbed by 0.6 percent in March after inching up by 0.1 percent in February. Economists had expected prices to rise by 0.3 percent.
The bigger than expected increase in producer prices came as energy prices skyrocketed by 5.6 percent in March following a 1.8 percent jump in February. Gasoline prices soared by 16.0 percent.
The report also showed a rebound in food prices, which rose by 0.3 percent in March after falling by 0.3 percent in the previous month.
Core producer prices, which exclude food and energy prices, also rose by 0.3 percent in March following a 0.1 percent uptick in February. Core prices had been expected to edge up by 0.2 percent.
The growth in core prices in March matched the 0.3 percent increase in prices for services, which came in unchanged in February.
A 1.1 percent spike in prices for trade services more than offset a 0.8 percent slump in prices for transportation and warehousing services.
The Labor Department said 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.
Compared to the same month a year ago, producer prices were up by 2.2 percent in March, reflecting an acceleration from the 1.9 percent increase in February.
Meanwhile, the annual rate of growth in core consumer prices edged down to 2.4 percent in March from 2.5 percent in the previous month.
"The upshot is that the producer price data are consistent with consumer price inflation remaining slightly below the Fed's target," said Paul Ashworth, Chief U.S. Economist at Capital Economics.
A separate report released by the Labor Department on Wednesday showed consumer prices in the U.S. increased by slightly more than anticipated in the month of March.
The Labor Department said its consumer price index climbed by 0.4 percent in March after edging up by 0.2 percent in February. Economists had expected the index to rise by 0.3 percent.
Consumer prices showed their biggest monthly increase in over a year, as energy prices soared by 3.5 percent in March after rising by 0.4 percent in February.
Excluding the jump in energy prices and a modest increase in food prices, core consumer prices inched up by 0.1 percent in February, matching the uptick seen in the previous month. Core prices had been expected to tick up by 0.2 percent.
Increases in prices for shelter, medical care, new vehicles, recreation, education, and tobacco were partly offset by lower prices for apparel, used cars and trucks, and airline fares.
With the monthly increase, the Labor Department said the annual rate of consumer price growth accelerated to 1.9 percent in March from 1.5 percent in February.
On the other hand, the report said the annual rate of growth in core consumer prices slowed to 2.0 percent from 2.1 percent.