- Joshua Shapiro, MFR
US producer prices dropped unexpectedly last month due to the lower cost of services and energy products. The Labour Department reported on Thursday that its Producer Price Index dropped 0.1% in March, following the preceding month's gain 0f 0.3% and falling behind analysts' expectations for a 0.0% reading. That marked the first decline since August 2016. On an annual basis, however, the PPI was up 2.3% last month, the largest gain since March 2012, compared to February's increase of 2.2% The cost of services fell 0.1%, accounting for about 75% of the drop. The price of energy plunged 2.9%, with gasoline prices falling 8.3%. Back in February, energy prices were 0.6% up. Taking into account surging oil prices and Saudi Arabia's intentions to cut production, producer prices are set to rebound in the upcoming months. Overall, inflation continues rising amid the US Dollar strength and stronger domestic demand, pleasing the Federal Reserve, which is expected to its interest rates in June. Thursday's data also showed that, excluding volatile items, producer prices were unchanged last month, after rising 0.3% in February, whereas analysts expected core prices to accelerate 0.2% in March. After the release, the US Dollar dropped markedly against other major currencies.
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