Wholesale prices in the U.S. declined in March for the first time since August 2016, a sign broader inflation will accelerate only gradually, a Labor Department report showed Thursday.
The producer-price index decreased 0.1% (forecast was for no change) following a 0.3% advance the prior month From a year earlier, wholesale prices were up 2.3% (forecast was 2.4%), the most in five years, after a 2.2% gain.
Excluding food and energy, the PPI was unchanged from the prior month and was up 1.6% from March 2016. Three-fourths of the decrease in the March PPI was due to a drop in final demand services.
A tempering of wholesale prices indicates price pressures are only slowly building in the production pipeline as stabilization in the global economy generates more demand for industrial materials.
While inflation met the Federal Reserve’s 2% goal in February, according to the central bank’s preferred measure, some officials focus more on the gauge excluding food and energy, which is still below their target.
Energy prices dropped 2.9% from previous month; food costs rose 0.9% PI goods prices decreased 0.1% after a 0.3% increase
Wholesale prices of services also fell 0.1% following a 0.4% rise the prior month.
Excluding volatile components such as food, energy, and trade services, producer costs rose 0.1% from prior month, and increased 1.7% from a year earlier 4.1% decrease in prices of loan services led the March drop in final demand services.
Retail margins in apparel, footwear and accessories declined, as did those for securities brokerage and trucking.
By Shobhana Chandra