Wholesale prices unexpectedly fell 0.4% in March, showing easing inflation backdrop ahead

Wholesale prices unexpectedly fell in March, setting up a favorable inflation backdrop as President Donald Trump began intensifying tariffs against U.S. trading partners, the Bureau of Labor Statistics reported Friday.

The producer price index, considered a leading indicator for pipeline inflation pressures, declined a seasonally adjusted 0.4% for the month, after rising 0.1% in February. Economists surveyed by Dow Jones had been looking for an increase of 0.2%. It was the first decline for PPI since October 2023.

Excluding food and energy, the so-called core PPI also dropped, down 0.1% against the estimate for a 0.3% increase. The index less food, energy and trade services increased 0.1%.

Stock market futures and Treasury yields both were higher following the release.

More than 70% of the slide in final demand prices came from a 0.9% tumble in goods prices, a key measure as policymakers look for inflation drivers. Most of that drop was attributed to an 11.1% slide in gasoline prices. Services prices also pulled back, falling 0.2%.

Nevertheless, the indicators showed inflation still holding above the Federal Reserve’s 2% target.

Headline PPI showed a 2.7% 12-month rate, while the index excluding food, energy and trade services was at a 3.4% rate.

Moreover, March inflation measures will be viewed as somewhat stale considering the uncertainty behind Trump’s trade policy. The president slapped a broad 10% levy against all imports while also revealing a menu of individual duties against dozens of other trading partners. Trump on Wednesday backed off what he termed “reciprocal” tariffs, instituting a 90-day negotiation period in an effort to reduce the U.S. trade deficit.

The BLS on Thursday also reported that consumer price pressures were easing, down 0.1% for a headline rate of 2.4% and a core reading of 2.8% that was the lowest in four years.

Minneapolis Fed President Neel Kashkari, in a CNBC interview earlier Friday, said there was “a lot of good news under the hood” about the CPI report, though he noted that the inflation data gets “pretty stale, pretty quickly” in light of the tariff news.

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