Wholesale Inflation Falls to the Lowest in Three Years as Energy Prices Tumble

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%).