US March producer prices rise strongly on food

WASHINGTON, April 22 (BestGrowthStock) – U.S. producer prices rose
more than expected in March on strong consumer food and
gasoline costs, but a small gain in the core measure pointed to
tame underlying inflation, a government report showed on
Thursday.

The Labor Department said the seasonally adjusted index for
prices paid at the farm and factory gate increased 0.7 percent
following a 0.6 percent drop in February.

Analysts polled by Reuters had expected producer prices to
rise 0.4 percent in March. Compared to March last year,
producer prices increased 6.0 percent, the largest advance
since September 2008. Producer prices rose 4.4 percent in
February, year over year.

The year-on-year increase in March was a touch above market
expectations for a 5.8 percent rise.

The department said 70 percent of the increase in
wholesale prices in March was due to a 2.4 percent jump in
consumer foods, the largest rise since January 1984. Gasoline
prices increased 2.1 percent after a 7.4 percent fall in
February.

Despite the rise in wholesale prices last month, inflation
pressures generally remain muted, with sluggish demand
constraining producers’ ability to pass on the high costs to
consumers.

Government data last week showed consumer prices barely
increased in March. A combination of benign inflation pressures
and excess resource slack in the economy support the Federal
Reserve’s commitment to low interest rates.

The U.S. central bank is due to hold a regular two-day
meeting next week and will probably renew its pledge to hold
lending rates low for an extended period.

Stripping out volatile food and energy costs, core
producer prices rose 0.1 percent last month, after February’s
0.1 percent gain. The core index had been forecast to rise 0.1
percent in March.

Core PPI was lifted by a 4.9 percent jump in jewelry
costs, the biggest gain since September 1982, the department
said. Compared to March last year, the core producer price
index rose 0.9 percent, in line with market expectations and
following a 1.0 percent rise in February.
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(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

US March producer prices rise strongly on food