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)

The Time JFK Called the Air Force to Complain About a 'Silly Bastard'

51 years ago, President John F. Kennedy made a very angry phone call.


Elsewhere on the web

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

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Business

Just In