U.S. March PPI far below expectations, with price increases showing a serious divergence, indicating energy shocks...

The U.S. Producer Price Index (PPI) for March rose far less than expected. Core wholesale inflation slowed significantly, while service-industry prices were completely flat. However, the picture reflected in intermediate demand data is more complex. Price pressure in the midstream of the production chain continues to build. The far-reaching impact caused by the blockade of the Strait of Hormuz—from helium shortages to a surge in fertilizer prices—has scarcely yet appeared in official data.
After the U.S. Bureau of Labor Statistics released the March Producer Price Index on Tuesday, the market took a breath of relief. Overall PPI rose 0.5% month over month, far below the market’s expected 1.2% increase. In March, West Texas Intermediate crude oil prices in West Texas broke above $100 per barrel, and wholesale gasoline prices surged 15.7%. The market had been genuinely worried that the Iran war would trigger a widespread surge in producer prices. Instead, the situation presented by the data is more nuanced. This gives bulls reasons to enter, but it also keeps the Federal Reserve cautious when announcing that it has overcome inflation.
The most important point about the March PPI is that “nothing happened.” Commodity prices jumped 1.6% month over month, the largest increase since August 2023, but this is almost entirely driven by energy prices. At the same time, service-industry prices rose by exactly 0.0%, setting the most stable record since August 2025. The degree of divergence between the two has reached the highest level in at least 14 months, which is also the most worth watching trend right now.
This shows that the price shock brought by the Iran war is still concentrated in energy and its direct derivatives (gasoline, diesel, and aviation fuel). This shock has not yet spread to other service areas that constitute major parts of the U.S. economy, such as healthcare, financial services, and logistics profits. Excluding food, energy, and trade services, core PPI rose only 0.2%, a sharp drop from 0.5% in January and February. On a year-over-year basis, core PPI edged up from 3.5% to 3.6%, but this figure has remained basically stable over the past six months.
Baird investment strategist Ross Mayfield pointed out that the market has already priced in some of the concerns about the situation in Iran, and believes the conflict will not carry into the second half of the year. The PPI data from Tuesday, at least for now, supports this view.
(The above content is Joshua Gibson’s commentary as of April 15, for reference only and does not constitute any investment advice
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