US PPI: Trend in inflation strengthening - Wells Fargo

Today's data showed that the Producer Price Index in the US rose 0.3% in March (3.0% y/y). According to analysts at Wells Fargo, with the exception of energy, gains were broad based. They point out that the trend in inflation is getting stronger.

Key Quotes: 

“Producer price inflation rose 0.3 percent in March, ahead of expectations for a 0.1 percent gain. Energy was a drag on the topline, but all other major sub-sectors saw prices rise last month. Total goods prices were up 0.3 percent on a similarly sized rise in core goods and the largest monthly increase in food since April 2014. A 32 percent jump in fresh & dry vegetables and 40 percent leap in egg prices accounted for much of the gain.”

“PPI for services advanced 0.3 percent for a third straight month.”

“Our preferred measure of core PPI rose 0.4 percent and points to the underlying trend in inflation continuing to strengthen. Exfood, energy and trade services, PPI is rising at more than a 4 percent annualized rate over the past three months.”