Wholesale inflation in March 2024:

Wholesale prices fell unexpectedly in March, setting a positive background for inflation as President Donald Trump began tightening tariffs on U.S. trading partners, the Bureau of Labor Statistics reported Friday.

The producer’s price index, considered a key indicator of pipeline inflation pressure, fell by 0.4% for the month after a 0.1% rise in February. Economists surveyed by Dow Jones were looking for a 0.2% increase. This was the first decrease in PPI since October 2023.

Excluding food and energy, the so-called core PPI also increased by 0.3%, which decreased by 0.1% compared to the estimated. Low-indexed food, energy and trade services increased by 0.1%.

Stock market futures and Treasury yields were both high after release.

Over 70% of the final demand price slides came from falls at 0.9% of the product price. This is an important measure as policymakers are looking for inflation drivers. Most of that drop was due to a slide of 11.1% of gasoline prices. Service prices also rebounded, falling 0.2%.

Nevertheless, the indicators showed inflation still exceeding the Federal Reserve 2% target.

The heading PPI showed a 12-month rate of 2.7%, but the index, excluding food, energy and trade services, was a 3.4% rate.

Additionally, the inflation measures in March are considered to be somewhat outdated given the uncertainty behind Trump’s trade policy. The president slapped a wide range of 10% collections for all imports, as well as a menu of individual obligations to dozens of other trading partners. Trump on Wednesday enacted a 90-day negotiation period to set back what he called “mutual” tariffs and reduce the US trade deficit.

BLS also reported on Thursday that reduced consumer pricing pressures, with a headline rate of 2.4% and a 2.8% core reading, the lowest in four years.

In an interview with CNBC, President Neil Kashkari, the federal president of Minneapolis, said there was “a lot of good news under the hood” on the CPI report late Friday, but he said inflation data will be “quite old and quite fast” in light of tariff news.

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