Wholesale inflation fell unexpectedly last month, posting the biggest drop in nearly three years due to falling energy prices.
The Labor Department’s producer price index (PPI) fell 0.5%, the most since April 2020, after an unchanged reading in February. Economists had expected a slight increase. On a year-over-year basis, the PPI rose 2.7%, well below the previous month’s 4.9% jump and also below estimates.
The PPI, excluding food, energy and trade services, rose 0.1%, half of February’s increase, and was below expectations. However, the annual gain of 3.6% was more than forecasts.
Drop in the price of gasoline
The fall in global PPI was driven by a 1% drop in goods prices, with 80% of that attributable to falling energy costs. They sank 6.4%, led by an 11.7% drop in gasoline prices. Food costs rose 0.6% after falling in the previous three months.
Prices for services fell by 0.3%, also the most since April 2020. In this category, the largest declines occurred in retail sales of fuels and lubricants (-12.1%) ; retail sale of large household appliances (-9.4%); and the wholesale sale of machinery and vehicles (-7.3%).
