PPI Data Still Points to Sticky Producer Inflation Beneath the Headline Miss

PPI surged again in March, led by goods. But the rise was much less than expected. Hooray?

Today, the BLS released its report on PPI Final Demand for March 2026.

Once again, the PPI jumped considerably, up 0.5 percent. But the Bloomberg consensus was for a 1.2 percent rise.

PPI Final Demand Month-Over-Month

• Final Demand: 0.5 percent
• Final Demand Goods: 1.6 percent
• Final Demand Services: 0.0 percent
• Final Demand Food: -0.3 percent
• Final Demand Less Food and Energy: 0.1 percent

Final Demand Services

• Final demand services: The index for final demand services was unchanged in March following a 0.3- percent advance in February. In March, price increases of 1.3 percent for final demand transportation and warehousing services and 0.1 percent for final demand services less trade, transportation, and warehousing offset a 0.3-percent decline in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.)
• Product detail: Within final demand services in March, prices for airline passenger services rose 2.8 percent. The indexes for food retailing; apparel, jewelry, footwear, and accessories retailing; outpatient care (partial); and truck transportation of freight also moved higher. In contrast, margins for food and alcohol wholesaling fell 6.0 percent. The indexes for fuels and lubricants retailing; securities brokerage, dealing, and investment advice; deposit services (partial); and brokerage fees and commissions for residential property agreements also decreased.

Final Demand Goods

• Final demand goods: The index for final demand goods increased 1.6 percent in March, the largest rise since moving up 1.6 percent in August 2023. Most of the March advance can be traced to prices for final demand energy, which jumped 8.5 percent. The index for final demand goods less foods and energy increased 0.2 percent. In contrast, prices for final demand foods declined 0.3 percent.
• Product detail: Nearly half of the March advance in the index for final demand goods is attributable to a 15.7-percent rise in gasoline prices. The indexes for diesel fuel, jet fuel, home heating oil, meats, and primary basic organic chemicals also increased. Conversely, prices for fresh and dry vegetables fell 10.7 percent. The indexes for natural gas and for carbon steel scrap also decreased.

Does anyone expect a sustained performance on food given fertilizer and diesel prices?

Within intermediate demand in March, prices for processed goods rose 2.6 percent, the index for unprocessed goods fell 2.6 percent, and prices for services declined 0.1 percent.

Processed Goods for Intermediate Demand

• Processed goods for intermediate demand: The index for processed goods for intermediate demand rose 2.6 percent in March, the largest increase since moving up 2.8 percent in May 2022. More than threequarters of the broad-based March advance can be traced to an 11.3-percent jump in prices for processed energy goods. The indexes for processed materials less foods and energy and for processed foods and feeds also rose, 0.7 percent and 0.9 percent, respectively. For the 12 months ended in March, prices for processed goods for intermediate demand increased 6.6 percent, the largest 12-month advance since moving up 7.6 percent in November 2022.
• Product detail: More than half of the March increase in the index for processed goods for intermediate demand can be attributed to a 42.0-percent jump in prices for diesel fuel. The indexes for gasoline, jet fuel, primary basic organic chemicals, steel mill products, and residual fuels also rose. Conversely, prices for natural gas to electric utilities fell 7.2 percent. The indexes for soybean cake and meal and for softwood lumber (not edge worked) also declined.

Unprocessed Goods for Intermediate Demand

• Unprocessed goods for intermediate demand: Prices for unprocessed goods for intermediate demand moved down 2.6 percent in March, the largest decline since falling 3.5 percent in April 2025. The March decrease can be traced to a 7.7-percent drop in the index for unprocessed energy materials. In contrast, prices for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy advanced 0.5 percent and 0.2 percent, respectively. For the 12 months ended in March, the index for unprocessed goods for intermediate demand rose 4.9 percent, the largest 12-month increase since moving up 6.5 percent in March 2025.
• Product detail: Leading the March decline in the index for unprocessed goods for intermediate demand, prices for natural gas dropped 51.7 percent. The indexes for slaughter cattle, carbon steel scrap, slaughter chickens, fresh fruits and melons, and fresh and dry vegetables also decreased. Conversely, prices for grains rose 7.6 percent. The indexes for crude petroleum and for nonferrous metal ores also increased.

Anyone expecting a repeat performance on natural gas?

PPI Final Demand Year-Over-Year Percentages

• Final Demand: 4.0 percent
• Final Demand Goods: 4.9 percent
• Final Demand Services: 3.7 percent

The year-over-year PPI measures generally bottomed min May of 2023. The trend is decidedly unfriendly.

Final Thoughts and Question of the Day

Q: Was this a good report?
A: It depends on the slant.

The stock market seems to like the news. Alternatively, and more likely, the equity markets are blockade related.

Oil is falling on news Trump’s blockade isn’t exactly working, and Saudi Arabia doesn’t want the blockade at all.

The bond market is more telling.

Despite the fact that the PPI “beat the street” was 0.7 percentage points better than expected with an additional 0.2 percent favorable revision, long term bond yields did not budge.

If the bond market does not think this was a good report, then why should I?

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