Inflation plummets to 2.7% in March in producer price index
Zachary Halaschak
Inflation plunged to a 2.7% annual rate in March, as measured by the producer price index — the lowest level in more than two years.
On a month-to-month basis, the wholesale price index declined by 0.5%, the Bureau of Economic Analysis reported Thursday morning — more encouraging inflation news. The decline was a shock to forecasters who expected a mild increase rather than an impressive drop. The PPI's headline number is now the lowest it has been since January 2021 and the monthly decrease was the biggest since March 2020.
The decline is an indication that inflationary pressures are abating in the face of the Federal Reserve’s campaign to slow economywide spending by hiking interest rates.
"Net, net, the economy is slowing with job layoffs rising and core producer prices cooling down," said Chris Rupkey, chief economist at FWDBONDS. "Producers are likely to cut consumers a break from the rapid price increases they have passed on over the last year. Core producer price inflation has been cut in half from year ago levels which shows the rapid Fed rate hikes since March 2022 are starting to bite."
Nevertheless, inflation is still running much hotter than the central bank’s target and dinging household purchasing power. Prices paid by producers eventually translate to prices paid by households.
Given the trendline over the past several months, it appears as though inflation as measured by the PPI peaked and is on its way down. Annual wholesale inflation reached its zenith in March 2022.
The Fed's target for inflation is 2%, although it uses a different gauge to assess the target.
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https://www.washingtonexaminer.com/policy/economy/inflation-fell-to-2-7-in-march-in-producer-price-index
