Via Bloomberg:
Producer price inflation unexpectedly surged as atypical winter freezes jacked up food prices and gasoline made a partial comeback. The overall PPI rebounded 0.7 percent after declining 0.6 percent in February. The boost in March was considerably above analysts' expectation for a 0.4 percent increase. At the core level, the PPI inflation rate was steady with a 0.1 percent gain that also matched market forecasts.
The jump in the headline PPI was led by a 2.4 percent spike in food prices, after a 0.4 percent rise in February. The March surge reflected the loss of some vegetables to atypically cold winter weather in key growing regions in the U.S. For the latest month the fresh and dried vegetables category surged a monthly 49.3 percent.
Turning to energy, this component rebounded 0.7 percent after dropping 2.9 percent the month before.
Gasoline rose 2.1 percent after a 7.4 percent drop in February.
At the core level, inflation is almost nonexistent outside of commodities related gains. According to the BLS, 85 percent of the core rise came from higher jewelry prices due to higher gold and other metals costs.
For the overall PPI, the year-on-year rate jumped to 6.1 percent from 4.6 percent in February (seasonally adjusted). The core rate year-ago pace edged down to 0.8 percent from 0.9 percent the month before. On a not seasonally adjusted basis for March, the year-ago increase for the headline PPI was up 6.0 percent while the core was up 0.9 percent.
Inflation at the producer level jumped in the latest month but much of it is temporary as food price inflation will ease as crops from other regions come into play, adding to supply. And while high, oil prices have steadied.
More evidence to the Fed to keep rates in check through years end? Maybe not. However, If I had more time I would pick apart the energy portion of this report. I would like to know if their are any potential inflationary trends. Also, Check out Alex's update on Financial Equities.
Patrick M. Ambrus
Managing Partner
Analyze Capital LLC
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