The US Producer Price Index rose by 0.5% in March, the same as in February and below the 1.1% gain expected in a survey compiled by Bloomberg as of 7:45 am ET.
Energy prices jumped by 8.5% in the month after a 2.1% gain in the previous month due to a 15.7% surge in gasoline prices, while food prices fell by 0.3% from a 2.4% gain in February.
After excluding food and energy prices, core PPI increased by 0.1%, below the 0.4% gain expected and slower than a 0.3% gain in the previous month.
PPI accelerated to 4% year-over-year in March from 3.4% in February, while core PPI remained at a 3.8% gain year-over-year. The year-over-year rate for PPI excluding food, energy and trade services increased to 3.6% from 3.5% in the previous month.
The monthly producer price index, or PPI, reported by the Bureau of Labor Statistics measures the index level of prices received by producers for products such as energy, food, vehicles, and services. The core measure, excluding the volatile food and energy components, is a measure of underlying inflation.
Sharply higher prices are a sign of demand, but an increase at the producer level without a pass-through to the consumer level would suggest smaller profits at the retail level. As a result, the stock reaction depends on the movements at both levels. Higher inflation is generally a negative for bonds.