Wholesale inflation rose in March well above the Federal Reserve’s 2% inflation target. The results were not as dramatic as analysts expected, but supply-chain stages showed high inflation levels remaining in the wholesale pipeline.
The Bureau of Labor Statistics reported Tuesday that the producer price index (PPI), a measure of what producers get for final demand goods and services, rose 0.5% in March from February, much less than the expected 1.1% increase from analysts.
The PPI rose 4% year-over-year in March, the largest increase since February 2023. Taking out volatile food and energy costs, the core PPI rose 3.8% year-over-year.
Goods prices rose month-over-month in three of the four supply-chain stages. Three of the four stages reported the largest year-over-year increases in at least three years.
Stage 4 goods inputs, measuring the products purchased by industries primarily producing output sold to final demand—such as RV manufacturers—rose 0.8% in March after a revised 0.9% increase in February. Overall, Stage 4 intermediate demand in February rose 4.4% year-over-year.
Goods inputs for Stage 3 intermediate demand, measuring suppliers to Stage 4 producers such as RV manufacturers, rose 2.0% in March after a revised 1.1% increase in February. The reading marked only the third time since 2024 that Stage 3 goods inputs rose 2.0%. They have not increased beyond that level since 2024. Overall, year-over-year Stage 3 demand in March rose 2.6%, the largest increase since a 3.9% rise in January 2023.
Goods inputs for Stage 2 intermediate demand, measuring suppliers to Stage 3 suppliers, decreased 0.8% in March from February. However, February’s goods inputs rose a revised 4.7%, up from an initially reported 3.1% increase. Overall, year-over-year Stage 2 intermediate demand rose 4.3%, the largest year-over-year increase since January 2023.
Finally, goods inputs for Stage 1 demand rose 2.4% in March after a 1.8% increase in February. Overall, year-over-year Stage 1 intermediate demand rose 6.2%, the highest level since November 2022.
