U.S. Producer Price Inflation Posts Highest Annual Increase Since 2011

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The numbers: The producer price index rose 1% in March, the U.S. Labor Department said Friday. Economists polled by the Wall Street Journal had forecast a 0.5% rise.

The rate of wholesale inflation over the past 12 months climbed to 4.2% in March. That’s the highest level since September 2011. Because PPI was so weak last spring, increases this year are going to push the annual readings higher for at least a few months.

The government did not release the data for 25 minutes after the scheduled release time on its website, an extraordinary delay of economic data that is focus of global financial markets. The Labor Department no longer allows reporters access to the data in a secure room without communication tools to allow analysis of the data ahead of the publication time.

A spokesman for the BLS declined to comment regarding the delay.

What happened: Most of the increase in producer prices last month was tied to higher costs of energy, which jumped 5.9%. Chemical and steel-related products also rose sharply.

Core prices, which strip out volatile foods, energy and trade prices, rose 0.6% in March and were up 3.1% year-on-year, its highest level since September 2018.

Big picture: The data show that supply-chain issues combined with recovering demand is placing upward pressure on a broad array of prices at the producer level, said Josh Shapiro, chief U.S. economist at MFR Inc. Federal Reserve officials expect these gains will be temporary.

What are they saying? The pandemic has put producer prices on a roller coaster,” said Bill Adams, senior economist at PNC Financial Services Group. At first prices plunged but have now jumped back, he said. In the near-term, PPI inflation will accelerate but then should slow later in the year, Adams said.

Market reaction: Stocks opened higher on Friday with the Dow Jones Industrial Average DJIA, +0.89% and the S&P 500 index SPX, +0.77% notching new record highs.

Source: by Greg Robb | Market Watch