US producer prices increase less than expected in March
Further increases are likely due to oil prices shooting up on Monday to more than US$100 a barrel
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[WASHINGTON] US producer prices increased less than expected in March, as the cost of services was unchanged.
However, energy prices – which surged because of the war with Iran – were fanning inflation pressures.
The producer price index (PPI) for final demand rose 0.5 per cent in March after a downwardly revised 0.5 per cent gain in February, the US Labor Department’s Bureau of Labor Statistics (BLS) said on Tuesday (Apr 14).
A jump in energy prices was partially offset by steady prices for services. March’s PPI data likely showed only the initial impact of the Middle East conflict.
Economists polled by Reuters had forecast the PPI accelerating 1.1 per cent, after a previously reported 0.7 per cent gain in February.
In the 12 months until March, the PPI advanced 4 per cent after increasing 3.4 per cent in February.
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Further increases are likely as oil prices shot up on Monday to more than US$100 a barrel, after the US military said it would blockade ships leaving Iran’s ports.
Oil prices have jumped more than 35 per cent since the US-Israeli war with Iran started at the end of February.
The BLS reported on Apr 10 that the consumer price index (CPI) logged its biggest monthly increase in nearly four years in March, amid a record jump in the cost of petrol and diesel.
The Federal Reserve tracks the personal consumption expenditures (PCE) price indices for its 2 per cent inflation target.
Prior to the PPI report, economists estimated that PCE inflation, excluding the volatile food and energy components, increased 0.2 per cent in March after rising 0.4 per cent for two consecutive months.
That would translate to a year-on-year increase of 3.1 per cent, up from 3 per cent in February. Economists expect the oil-price shock will have a moderate impact on the so-called core inflation. REUTERS
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