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Inflation Scare: Producer Price Index Surges Much Higher Than Expected

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Prices received by wholesalers and producers of goods and services rose much faster than expected in March, data from the Bureau of Labor Statistics showed Friday.

The Producer Price Index rose 1 percent in March, more than twice the consensus forecast. On a year-over-year basis, the index is up 4.2 percent, higher than the expected 3.8 percent. That is the fastest pace of price gains since September 2011, when prices climbed 4.5 percent.

The release of the index data was delayed by over 20 minutes when the BLS website crashed on Friday morning.

The PPI measures prices received by businesses, while the more familiar Consumer Price Index measures prices paid by consumers. The two tend to track each other over time but can vary from month to month. Producer prices rose 0.5 percent in February and 1.3 percent in January.

The year-over-year measure was expected to rise dramatically because last year’s prices were depressed by the sudden imposition of lockdown orders in March 2020. Even still, the gain beat those expectations.

Prices for final demand goods—those sold to businesses and households after their last stage of production—rose 1.7 percent in March, the largest increase since the index began in December 2009. The inflation in goods prices accounted for 60 percent of the overall gains in the index.

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