U.S. producer prices increased more than expected in March amid a surge in demand for services, suggesting inflation could remain high for a while.
The producer price index for final demand increased 1.4% after rising 0.9% in February, the Labor Department said on Wednesday. In the 12 months through March, the PPI jumped 11.2%, the largest increase since 12-month data were first calculated in November 2010, after advancing 10.3% in February.
Economists polled by Reuters had forecast the PPI rising 1.1% and accelerating 10.6% year-on-year.
Russia's invasion of Ukraine has boosted prices for commodities such as crude oil, wheat and sunflower oil.
The Russia-Ukraine war, now in its second month, and lockdowns in China to contain a resurgence in COVID-19 infections, are seen further disrupting supply chains, worsening shortages of some goods.
The government reported on Tuesday that monthly consumer prices increased by the most in 16-1/2 years in March, driven by gasoline. But there is cautious optimism that inflation, which by all measures has way exceeded the Federal Reserve's 2% target, has peaked.
The U.S. central bank in March raised its policy interest rate by 25 basis points, the first hike in more than three years. Minutes of the policy meeting published last Wednesday appeared to set the stage for big rate increases down the road. The Fed is expected to soon begin trimming its asset portfolio.
Excluding the volatile food, energy and trade services components, producer prices accelerated 0.9% in March. The so-called core PPI increased 0.2% in February. In the 12 months through March, the core PPI soared 7.0% after rising 6.7% in February. (Reporting By Lucia Mutikani Editing by Chizu Nomiyama)
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