The Producer Price Index (PPI) increased by 11.2% from last March, the U.S. Bureau of Labor Statistics (BLS) reported, making the spike in the annual rate the highest on record.
PPI calculates price movement and measures inflation based on the costs to the products’ industries.
According to the BLS report released on April 13, March’s producer prices were up 1.4%, following a 1.2% jump in January and a 0.9% increase in February. This month’s spike marks a 23-month steady run of rising producer prices. The BLS said annual producer price data had been collected since November 2010.
The report for March shows the highest producer price increase in demand goods was in energy, soaring another 5.7% for the month. The growth is higher than the 4.1% seen in January but lower than the 7.5% increase reported in February. Energy prices are up 1.9% when compared to this time in 2021.
The report shows diesel fuel prices spiked 20.4% in March, and jet fuel advanced 23%, while the index for utility natural gas declined by 8.6%.
In demand services, the index shows transportation and warehousing were up 5.5% and trade another 1.2%.
The indexes for food items such as fresh and dry vegetables were up, while prices for beef and veal fell 7.3%, the report shows. Producer prices for food rose by 2.4%.
The index shows a 2.3% rise in final demand for goods, the same rate increase producers saw in February. The index reflects a 0.9% jump for final demand services for March, resulting in “the largest advance since rising 1% in January 2021,” the Labor Department said in a release.
Data in the report indicates that core producer prices, excluding energy, food, and trade, still rose 7% from 12 months ago.
“The severe imbalance between robust demand and handicapped supply will persist throughout Q2, keeping producer price inflation sticky and elevated until price pressures decelerate in the latter part of 2022,” said Mahir Rasheed, an economist at Oxford Economics, said in an RTTNews report.
Rasheed continued, “With a new wave of lockdowns in China and the war in Ukraine raging on, however, risks to the inflation outlook remain firmly to the upside, reaffirming our view that the Fed must proceed with a faster pace of policy normalization in the months ahead.”
The Labor Department’s PPI report was published a day after the agency released data for March’s Consumer Price Index (CPI), which shows inflation rose 8.5% from March 2021. The department reported it marked a 40-year high as the most significant 12-month increase since December 1981.
The CPI indexes show the greatest increases were in cost-of-living items, including gasoline, shelter, and food. Gasoline accounted for over half of the monthly increase in March, with a rise of 18.3% and a year-over-year growth of 32%. The food index increased 8.8% from March 2021.
Consumers also saw soaring prices of used cars and trucks over the last year, but according to the CPI released this week, prices appear to be on their way down, falling 3.8% in March.