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Producer Price Index Falls 0.4% in March 2025 Amid Energy and Food Price Declines
By News Desk - Apr 11, 2025, 05:30 AM ET
Last Updated - Apr 11, 2025, 10:29 AM EDT
The U.S. Bureau of Labor Statistics reports a significant drop in the Producer Price Index, influenced by decreases in energy and food sectors.
The Producer Price Index (PPI) for final demand decreased by 0.4 percent in March 2025, according to the latest report from the U.S. Bureau of Labor Statistics. This notable drop follows minor increases in the two preceding months and marks a 2.7 percent rise over the past year. The decline is largely attributed to significant reductions in prices for energy and food products.
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The March decline in PPI was primarily driven by a 0.9 percent drop in prices for final demand goods. This marks the largest decrease since October 2023. A critical factor in this decline was a sharp 4.0 percent drop in the index for final demand energy, alongside a 2.1 percent reduction in food prices. In contrast, the index for goods excluding foods and energy saw a minor increase of 0.3 percent, showcasing resilience in other sectors.
Drop in gasoline prices
Within the energy sector, the most dramatic shift was an 11.1 percent decrease in gasoline prices, contributing significantly to the overall reduction in the Producer Price Index. Conversely, the report highlighted a robust 7.1 percent increase in steel mill products prices, indicating positive movement in some manufacturing areas.
Service sector prices followed a similar downward trend, with the index for final demand services falling by 0.2 percent, the first such decline since July 2024. This was led by a 0.7 percent reduction in trade service margins. Additionally, transportation and warehousing services dipped by 0.6 percent, whereas services excluding trade, transportation, and warehousing recorded a slight increase of 0.1 percent.
Intermediate demand edges down
On the intermediate demand front, processed goods prices for March remained unchanged, reflecting stability in certain supply chain components, whereas prices for unprocessed goods fell by 4.1 percent, largely due to lower prices in unprocessed foodstuffs. The index for services within intermediate demand edged down by 0.1 percent, following a small rise in February.
Further analysis of the production flow reveals a 0.1 percent decrease in the index for stage 4 intermediate demand. This marks its first decline since May 2024, largely influenced by decreasing prices for retail properties, crude petroleum, and service sector inputs. As the overall economic landscape adjusts to these fluctuations, analysts anticipate a potential stabilization in upcoming months.
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