Wholesale inflation unexpectedly fell last month, posting the biggest decline in almost three years as energy prices tumbled.
The Labor Department’s Producer Price Index (PPI) dipped 0.5%, the most since April 2020, after an unchanged reading in February. Economists had anticipated a slight gain. Year-over-year, the PPI rose 2.7%, well below the 4.9% jump the month before and also less than estimates.
The PPI excluding food, energy, and trade services added 0.1%, half of February’s increase, and was below expectations. However, the annual gain of 3.6% was more than forecasts.
Gasoline Price Slump
The drop in the overall PPI was driven by a 1% slide in goods prices, and 80% of that was attributable to tumbling energy costs. They sunk 6.4%, led by an 11.7% plunge in gasoline prices. Food costs were up 0.6% after falling the previous three months.
Prices for services were down 0.3%, also the most since April 2020. In that category, the biggest declines were in fuel and lubricants retailing (-12.1%); major appliance retailing (-9.4%); and machinery and vehicle wholesaling (-7.3%).