The cost of wholesale goods and services jumped in March largely because of more expensive gas and food, signaling that U.S. inflation is likely to stay near a 40-year high through the spring.
The numbers: The cost of wholesale goods and services jumped 1.4% in March largely because of more expensive gas and food, signaling that U.S. inflation is likely to stay near a 40-year high through the spring.The increase in wholesale prices last month was the largest since the government reformulated the index in 2009 and likely one of the biggest since the early 1980s.
The Federal Reserve views the core rate as a clearer window into inflation trends because it strips out volatile food and energy prices. Trends in wholesale prices often offer clues on the path of inflation more broadly — what consumers end up paying for goods and services. The PPI reflects what companies pay for supplies such as grains, fuel, metals, lumber, packaging and so forth.
Key details: The wholesale cost of good jumped 2.3% last month, with more than half of the increased tied to energy. The cost of oil jumped to a 13-year high in March after the Russian invasion of Ukraine. Food costs might not level off for a while. Russia and Ukraine are two of the world’s biggest producers of grains such as wheat, corn and barley, whose supplies have been interrupted by the war. Ukraine’s grain production could fall as much as 40%.The cost of partly finished goods and raw materials, meanwhile, both advanced in March. These prices have jumped around a lot lately but remain extremely high, offering little sign of an imminent and rapid slowdown in inflation.