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.

How a Psychedelic Masterpiece Is Made

A short documentary about Bruce Riley, an artist who paints abstract wonders with poured resin

Join the Discussion

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

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

How a Psychedelic Masterpiece Is Made

A short documentary about Bruce Riley, an artist who paints abstract wonders with poured resin

Videos

Why Is Google Making Skin?

Hidden away on Google’s campus, doctors are changing the way people think about health.

Video

How to Build a Tornado

A Canadian inventor believes his tornado machine could solve the world's energy crisis.

Video

A New York City Minute, Frozen in Time

This short film takes you on a whirling tour of the Big Apple

Video

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we save the night sky?

More in Business

Just In