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Wholesale price increase in the United States dropped further in March strengthening the perception that inflation is tapering. A Bureau of Labor Statistics press release shows the Producer Price Index (PPI) for final demand increased by 0.2 percent in March after a 0.6 percent rise in February and a 0.4 percent increase in January.
A lower inflationary trend could encourage the Federal Reserve to return to interest rate cuts, according to media reports.
The March increase in the index for final demand is primarily driven by a 0.3-percent rise in prices for final demand services, marking the third consecutive monthly rise.
Notably, prices for final demand goods edged down by 0.1 percent during the same period.
A significant factor contributing to the March increase in prices for final demand services was the notable rise in the index for securities brokerage, dealing, investment advice, and related services, which saw a 3.1 percent surge.
In contrast to the rise in services, prices for final demand goods decreased by 0.1 percent in March. This decline is attributed to the drop in the index for final demand energy, which decreased by 1.6 percent.
Leading the decrease in the index for final demand goods was a substantial drop in gasoline prices, which fell by 3.6 percent during the month.
Within intermediate demand, prices for processed goods declined by 0.5 percent in March, driven primarily by a decrease in prices for processed energy goods, which dropped by 1.5 percent.
The decline in prices for processed goods for intermediate demand was notably influenced by a sharp decrease in natural gas prices to electric utilities, which fell by 6.4 percent during March.
The index for unprocessed goods for intermediate demand saw a decline of 1.9 percent in March, mainly due to a significant drop in prices for unprocessed energy materials, which fell by 6.9 percent.
Leading the March decrease in prices for unprocessed goods was a substantial drop in natural gas prices, which plummeted by 37.0 percent during the month.
Prices for services for intermediate demand increased by 0.2 percent in March, primarily attributed to a rise in the index for services less trade, transportation, and warehousing for intermediate demand.
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