Producer Prices Increase by 0.7% in March

More

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.

Jump to comments
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.
Get Today's Top Stories in Your Inbox (preview)

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity


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

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity

Video

Is Technology Making Us Better Storytellers?

The minds behind House of Cards and The Moth weigh in.

Video

A Short Film That Skewers Hollywood

A studio executive concocts an animated blockbuster. Who cares about the story?

Video

In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.

Video

What Is a Sandwich?

We're overthinking sandwiches, so you don't have to.

Video

Let's Talk About Not Smoking

Why does smoking maintain its allure? James Hamblin seeks the wisdom of a cool person.

Writers

Up
Down

More in Business

Just In