WASHINGTON: Despite a big drop in energy prices, rising healthcare and transportation costs fed a surge in US wholesale prices in March, pointing to stronger pressures on inflation, the Labor Department reported Tuesday.
Bulk prices for machinery, air travel and liquor also rose, while wholesale costs for cable and satellite subscriptions had their largest monthly increase on record, the report showed, reports AFP.The Producer Price Index, which tracks changes in the costs of wholesale goods and services, rose 0.3 percent for the month, a tenth of a point faster than economists were expecting.
Economists say there is frequently only a weak connection between PPI and more closely watched measures of consumer inflation but rising prices are sure to attract some attention at the central bank.
Wholesale prices for energy goods like jet fuel, gasoline and diesel fell 2.1 percent from February, the biggest drop in two years. This offset a jump in food prices, which rose 2.2 percent, the largest increase in nearly four years.
But outpatient healthcare jumped 0.4 percent in the month, and inpatient care rose 0.3 percent, while transportation and warehousing surged 0.6 percent, fueling the overall PPI increase.
Excluding the volatile categories of food and fuel, PPI also rose 0.3 percent, faster than the 0.2 percent economists had been expecting.
And there were signs of a more substantial trend in comparisons with prices in March of last year.Year-on-year, the index rose three percent -- the fastest pace since November and the fourth consecutive monthly increase.
When food, fuel and trade services are discounted, the annual core index rose 2.9, the highest level since August 2014.
The Federal Reserve is expected to raise the benchmark interest rate at least twice more this year and three times in 2019.
Financial markets have shown heightened sensitivity to suggestions the Fed could raise rates a total of four times this year.