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Producer Price Index (PPI) month-over-month, data from BLS, chart by Mish

The BLS Reports …

PPI Month-Over-Month Details

• The Producer Price Index for final demand decreased 0.4 percent in March, seasonally adjusted.
• Over 70 percent of the decrease in the index for final demand can be traced to prices for final demand goods, which fell 0.9 percent.
• The index for final demand services declined 0.2 percent.
• Prices for final demand less foods, energy, and trade services edged up 0.1 percent in March after increasing 0.4 percent in each of the previous 3 months.

Final Demand Goods Details

• Prices for final demand goods moved down 0.9 percent in March, the largest decrease since falling 1.4 percent in October 2023.
• Over three-fourths of the March decline is attributable to a 4.0-percent drop in the index for final demand energy.
• Prices for final demand foods decreased 2.1 percent.
• The final demand goods less foods and energy rose 0.3 percent.
• Two-thirds of the March decline in the index for final demand goods can be traced to an 11.1-percent drop in prices for gasoline.
• The indexes for chicken eggs, beef and veal, fresh and dry vegetables, diesel fuel, and jet fuel also moved lower.
• Prices for steel mill products increased 7.1 percent. The indexes for residential electric power and for processed young chickens also advanced.

PPI Final Demand Services

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Producer Price Index (PPI) services data from BLS, chart by Mish

Final Demand Services Details

• Prices for final demand services fell 0.2 percent in March, the largest decline since moving down 0.2 percent in July 2024.
• Leading the March decrease, margins for final demand trade services dropped 0.7 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)
• Prices for final demand transportation and warehousing services moved down 0.6 percent.
• In contrast, the index for final demand services less trade, transportation, and warehousing increased 0.1 percent.
• A 1.3-percent decrease in the index for machinery and vehicle wholesaling was a major factor in the March decline in prices for final demand services.
• The indexes for airline passenger services; food retailing; apparel, jewelry, footwear, and accessories retailing; automobiles retailing (partial); and guestroom rental also moved lower.
• Prices for legal services rose 1.5 percent. The indexes for chemicals and allied products wholesaling and for long-distance motor carrying also advanced.

Producer Prices Year-Over-Year

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Producer Price Index (PPI) year-over-year, data from BLS, chart by Mish

PPI Year-Over-Year Details

• The Producer Price Index for final demand was up 2.7 percent.
• Final demand goods rose 0.9 percent
• Final demand services rose 3.6 percent

Falling Prices Hooray?

Yes, and no but mostly no.

The plunge in the price of gasoline and energy is a sign of a slowing economy. Consumers will like the drop in the price at the pump but the repercussions are ominous.

The decline in the price of food is always welcome but last month and this month mostly balance out.

Impact of Tariffs

I bolded the key items: Prices for steel mill products increased 7.1 percent. The final demand goods less foods and energy rose 0.3 percent.

These are stagflationary items. Falling demand and rising prices.

This was not a good report.

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