U.S. Producer Price Index rose 0.3% in March, higher than Expectations

According to Labor Department, U.S. producer prices in March rose 0.3 percent after increasing 0.2 percent in February, driven by a rise in the cost of services such as healthcare and airline fees, pointing to a steady buildup of wholesale inflation pressures.

The increase in March has lifted the year-to-year increase in the PPI to 3.0 percent from 2.8 percent in February. Economists polled by Reuters forecasted before that the PPI gaining 0.1 percent last month and advancing 2.9 percent from a year ago. The core PPI increased 2.9 percent in the 12 months through March, the biggest increase since August 2014, after climbing 2.7 percent in February.

Last month, the price of services increased 0.3 percent, rising by the same margin for a third consecutive month. Accounted for 70 percent of the increase in the PPI last month, Services were boosted by a 0.4 percent rise in the cost of outpatient care. Increased cost of airline tickets, cable and satellite subscriber services also contributed to this increase.

The broad-base increase in wholesale prices indicates that inflation is very likely to pick up again this year. According to Reuters, Economists believe that Federal Reserve can push inflation toward the 2 percent target this year by a tightening labor market, weak dollar and fiscal stimulus in the form of a $15 trillion tax cut package and increased government spending.

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