Producer Prices Increase by 0.7% in March

The Producer Price Index for finished goods increased by 0.7% in March, according to the Bureau of Labor Statistics. That's a pretty major change from February's 0.6% decline. It's also higher than the consensus forecast of a 0.3% rise. Does this indicate that inflation is ramping up? Probably not.

First, PPI is a rather volatile statistic. The following chart from BLS demonstrates this point:

ppi 2010-03 cht1.PNG

As you can see, there's no trend that appears to be forming. Most of these big swings are driven by energy and food price, which tend to move around more than other prices. In March, they were up 2.4% and 0.7%, respectively.

It's more useful to look at the more stable core PPI, which strips out those factors. In March, core PPI was nearly flat with a 0.1% increase. That matched the increase for February and the consensus forecast. The following chart shows how less erratic core PPI has been, using the same vertical bounds as the chart above:

ppi 2010-03 cht2.PNG

Core PPI has only risen by more than 0.3% for one month in the past year. That shows pretty stable prices. This continues to support the argument based on the consumer price index that inflation is not much of a worry at this time.

Note: All statistics above are seasonally adjusted.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

The Best 71-Second Animation You'll Watch Today

A rock monster tries to save a village from destruction.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

The Best 71-Second Animation You'll Watch Today

A rock monster tries to save a village from destruction.

Video

The Case for Napping at Work

Most Americans don't get enough sleep. More and more employers are trying to help address that.

Video

A Four-Dimensional Tour of Boston

In this groundbreaking video, time moves at multiple speeds within a single frame.

Video

Who Made Pop Music So Repetitive? You Did.

If pop music is too homogenous, that's because listeners want it that way.

Video

Stunning GoPro Footage of a Wildfire

In the field with America’s elite Native American firefighting crew

More in Business

Just In