Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
  The Producer Price Index Increased 0.3% in March
Posted Under: Data Watch • Inflation


Implications:  Rising costs for health care, machinery, and vegetables pushed producer prices higher by 0.3% in March.  And producer prices are now up 3.0% in the past year, matching the fastest twelve-month pace going back to 2012.  Breaking down today's report show food prices rose 2.2% in March, led by a 31.5% surge in the cost of vegetables.  Meanwhile, energy prices fell 2.1% as fuel prices declined, but remain up 8.5% in the past year.  Strip out the typically volatile food and energy groupings, and "core" producer prices rose 0.3% in March and are up 2.7% in the past year (the largest twelve-month increase going back to 2011).  For comparison, "core" prices rose 1.5% in the twelve months ending March 2017, and 1.1% in the twelve months ending March 2016.  A look further down the pipeline shows the trend higher is likely to continue in the coming months.  Intermediate processed goods declined 0.3% in March, but are up 4.6% from a year ago, while unprocessed goods fell 4.8% in March but are up 4.2% in the past year.  And stripping out the food and energy components in intermediate goods shows a faster pace of inflation in the pipeline.  In short, producer prices are rising at a healthy pace, and the data gives the Fed a green light to raise rates three more times in 2018, so four rate hikes this year in total.  The pouting pundits of pessimism may cry fears of rising rates slowing economic activity, but the Federal Reserve is still running a loose monetary policy.  This is especially true now that anti-bank attitudes and regulation are being reversed, which reduces the headwinds to monetary growth.  Given the pickup in inflation, and with employment growth remaining strong, the greater risk now is that the Fed falls behind the curve.   

Click here for PDF version

Posted on Tuesday, April 10, 2018 @ 10:41 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2022 All rights reserved.