Editor’s Note: This article has been updated with additional content.
Wall Street braced for the Hormuz shock to hit wholesale prices in March. The data said not yet.
The Producer Price Index for final demand rose 0.5% month-over-month in March, matching February’s pace of 0.5% but landing below the 1.1% consensus estimate, according to the Bureau of Labor Statistics.
On an annual basis, PPI came in at 4% — below expectations of 4.6% — but up from 3.4% in February and hitting the highest value since February 2023.
Core PPI told the same story. PPI excluding food and energy rose just 0.1% on the month, well below the 0.5% forecast, and decelerated to 3.8% year-over-year against a 4.1% consensus.
| Metric | Actual | Consensus | Previous |
|---|---|---|---|
| PPI MoM | 0.5% | 1.1% | 0.5% |
| PPI YoY | 4.0% | 4.6% | 3.4% |
| Core PPI MoM | 0.1% | 0.5% | 0.3% (revised from 0.5%) |
| Core PPI YoY | 3.8% | 4.1% | 3.8% (revised from 3.9%) |
Energy Did The Lifting, Services Did The Dampening
The headline softness masked a stark split inside the report. Final demand goods surged 1.6% on the month — the largest rise since August 2023 — driven almost entirely by an 8.5% jump in energy prices.
That energy spike is the direct fingerprint of the Hormuz closure: gasoline prices alone rose 15.7%, accounting for nearly half of the entire goods advance.
Diesel fuel, jet fuel and home heating oil all climbed alongside. Foods declined 0.3%, providing a partial offset within goods.
Final demand services, which carry nearly 70% of the index’s weight, were unchanged — the first flat reading after a 0.3% gain in February.
The detail tells a mixed story. Transportation and warehousing services rose 1.3%, with airline passenger services jumping 2.8% and truck freight also higher.
But trade services — margins received by wholesalers and retailers — fell 0.3%, dragged down by a 6.0% collapse in food and alcohol wholesaling margins.
Services less trade, transportation and warehousing, which covers the bulk of the consumer services economy, edged up just 0.1%.
“March’s inflation could have been much worse. The Iran war triggered a spike in energy costs, but it may prove more of a one-off blip than the start of a 1970s-style inflationary spiral,” said David Russell, global head of market strategy at TradeStation.
“This is good news for the incoming Fed chair. The doves could make a comeback,” he added.
| Category | MoM % |
|---|---|
| Final Demand (Total) | +0.5% |
| Final Demand Goods | +1.6% |
| — Energy | +8.5% |
| — Foods | -0.3% |
| — Goods less foods & energy | +0.2% |
| Final Demand Services | 0.0% |
| — Transportation & warehousing | +1.3% |
| — Trade services | -0.3% |
| — Services less trade, T&W | +0.1% |
Market Reactions
The softer-than-expected PPI print reinforced what the peace talk headlines had already started: a broad unwind of war-premium trades.
Contracts on the S&P 500 — as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) — rose 0.38% to 6,912. The Nasdaq 100 advanced 0.63%, appearing on track for its longest winning streak since 2021.
The Dow Jones Industrial Average gained 0.17%.
WTI crude fell 3.1% to $95.97 a barrel, Brent dropped 1.5% to $97.90.
Financial stocks moved after quarterly results. JPMorgan Chase & Co. (NYSE:JPM) beat on earnings-per-share (EPS) at $5.94 versus $5.38 expected, but traded down 0.8% premarket.
Citigroup Inc. (NYSE:C) surged 1.6% after posting $3.06 against a $2.59 estimate. BlackRock Inc. (NYSE:BLK) gained 1.7% on a $14.06 print versus $12.44. Wells Fargo & Co. (NYSE:WFC) fell 3% despite a $1.60 EPS beat, with revenue missing at $21.4 billion against a $21.73 billion consensus.
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