WASHINGTON – U.S. wholesale prices increased in March by the most since last fall, driven largely by more expensive gas and electricity.
The Labor Department said Thursday that the producer price index , which measures price changes before they reach consumers, rose 0.6% in March after falling in three of the previous four months. Wholesale prices rose 2.2% from last year. Excluding the volatile food and energy categories, core wholesale prices rose 0.3% in March and 2.4% compared with a year ago.
The figures suggest that inflation is largely in check, a trend that has enabled the Federal Reserve to pull back from last year’s steady rate hikes. Fed policymakers suggested at their most recent meeting in March that they did not expect to hike short-term rates for the rest of this year.
Other measures of inflation are also mostly tame. The consumer price index, released Wednesday, rose 0.4% in March, a healthy gain, but increased just 1.9% in the past year. Excluding food and energy, core consumer prices increased just 0.1% from the previous month and 2% from a year earlier. That’s right at the Fed’s inflation target.
The Fed lifted the short-term interest rate it controls four times last year, and in December projected two further hikes this year. But signs of slower growth, a volatile stock market, and modest inflation caused them to switch gears.
President Donald Trump and his advisers have also cited low inflation as a reason the Fed should actually cut rates. Larry Kudlow, director of the president’s National Economic Council, said last week that the White House wants the Fed to reduce its benchmark rate – currently at a historically low level of between 2.25% and 2.5% – by one-half percentage point.
In minutes from their March meeting, released Wednesday, several Fed policymakers said they could shift toward either cutting or raising rates this year, depending on what the incoming economic data showed.