Wholesale Inflation Remains Stable in March Despite Gas Price Surge

The Producer Price Index (PPI) rose less than expected in March amid the spike in energy prices due to the war in Iran.

The PPI increased 0.5% during the month, which was the same as February and lower than the 0.6% recorded in January, according to a Tuesday (April 14) press release from the Bureau of Labor Statistics (BLS).

That figure was lower than expected, according to media reports. The Wall Street Journal reported Tuesday that the analysts it polled had forecast a 1.1% increase. Similarly, Reuters reported that the economist it polled had predicted a 1.1% rise. Reuters noted the forecast followed the BLS’ previously reported 0.7% gain in February; the agency later revised that figure down to 0.5%.

According to the BLS press release, the March rise was driven by a 1.6% increase in prices for final demand goods, the largest rise since August 2023. Prices for final demand services did not change during March.

Most of the March advance in final demand goods was caused by an 8.5% jump in prices for final demand energy.

“Nearly half of the March advance in the index for final demand goods is attributable to a 15.7-percent rise in gasoline prices,” the BLS said in the release. “The indexes for diesel fuel, jet fuel, home heating oil, meats and primary basic organic chemicals also increased.”

Both the WSJ and Reuters attributed these increases to the war in Iran.

The March increase drove the 12-month PPI to 4%, the highest level since the 4.7% recorded in February 2023, per the BLS release.

The PPI data was released on the same day that the National Federation of Independent Business (NFIB) reported that the Iran war and the subsequent surge in oil prices drove small business optimism below its 52-year average for the first time in a year in March.

NFIB Chief Economist Bill Dunkelberg said in a Tuesday press release that “the dramatic spike in oil prices has spooked consumers and owners alike. Small business owners are having to absorb those higher input costs and pass them along to their customers.”