US producer prices rise 4.0% in March, below forecast

The Labor Department’s Bureau of Labor Statistics reported U.S. producer prices for final demand rose 4.0% year-on-year in March, below the 4.7% economists had forecast. The PPI measures prices domestic producers receive for goods and services.

The final demand index tracks price changes at the wholesale and production stages across goods, services and construction. The March reading was lower than the 4.7% year-over-year increase that had been expected by analysts.

Economists monitor the PPI because changes in producer costs can flow through to consumer prices. The index records transactions at the point of production and sale and includes finished goods, services and intermediate inputs. A core PPI measure, which excludes food and energy, is often used to assess underlying inflation trends; the BLS summary did not include a core figure.

The producer price index differs from the consumer price index and the personal consumption expenditures price index. The Federal Reserve reviews a range of inflation data, including producer and consumer price measures, when setting interest rate policy.

The release follows a period of corporate earnings reports and sector-specific market developments that have kept investors focused on growth and inflation. The initial BLS release provided only headline figures; the agency will publish a detailed report with subindexes and month-to-month data that analysts will use to identify which sectors contributed to the March change.