The Producer Price Index for Finished Goods increased 1.0 percent in March, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This advance followed a 1.3-percent rise in February and a 0.6-percent decrease in January. The index for finished goods excluding foods and energy was unchanged in March after moving up 0.4 percent in February. At the earlier stages of processing, prices received by producers of intermediate goods increased 1.0 percent in March following a 1.1-percent advance a month earlier, and the crude goods index rose 3.2 percent after climbing 8.9 percent in February.
Once again, agricultural prices were a big reason for the jump; they increased 1.4%. This is the 4th straight month of increases over 1%. Energy was up 3.6%. Outside of food and energy, prices were up 0%. But - is there anybody out there who doesn't consume food or energy?
This is not good news from a Federal Reserve Perspective, as it adds further fuel to the inflation hawk's argument for either keeping rates where they are or possibly raising rates.
Remember this paragraph from the FOMC minutes:
In light of the recent economic data and anecdotal information, the Committee agreed that the statement to be released after the meeting should note that economic indicators had been mixed, that the adjustment in the housing market was ongoing, and that the economy seemed likely to expand at a moderate pace over coming quarters. Members agreed the statement also should indicate that inflation pressures seemed likely to moderate over time, but that recent readings on core inflation had been somewhat elevated and the high level of resource utilization had the potential to sustain inflation pressures. A persistence of inflation at recent rates could eventually have adverse consequences for economic performance. All members agreed the statement should indicate that the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected.
