Producer prices in the U.S. increased by more than expected in the month of March, according to a report released by the Labor Department on Tuesday.
The Labor Department said its producer price index rose by 0.3 percent in March after edging up by 0.2 percent in February. Economists had expected producer prices to inch up by 0.1 percent.
The report showed a 2.2 percent jump in food prices during the month was largely offset by a 2.1 percent slump in energy prices.
Excluding food and energy prices, core producer prices also increased by 0.3 percent in March after rising by 0.2 percent in the previous month. Core prices had been expected to rise by 0.2 percent.
The bigger than expected increase in core producer prices was primarily due to a 0.3 percent increase in prices for final demand services.
The Labor Department said a major factor in the advance in prices for final demand services was the index for outpatient care, which climbed 0.4 percent.
Prices for machinery, equipment, parts, and supplies, cable and satellite subscriber services, airline passenger services, food and alcohol, and hospital inpatient care also moved higher.
Compared to the same month a year ago, producer prices were up by 3.0 percent in March, reflecting an acceleration from the 2.8 percent growth in February. Core prices were up 2.7 percent year-over-year.
“This pipeline price pressure will feed into consumer prices soon and will ultimately prompt the Fed to hike interest rates an additional three times this year,” said Paul Ashworth, Chief U.S. Economist at Capital Economics.
On Wednesday, the Labor Department is scheduled to release a separate report on consumer price inflation in the month of March.
Consumer prices are expected to come in unchanged in March after rising by 0.2 percent in February. Core consumer prices are expected to increase by 0.2 percent.