U.S. wholesale prices surged last month as the Iran war drove up the cost of energy.
The Labor Department reported Tuesday that its producer price index — which measures inflation before it hits consumers — rose 0.5% from February and 4% from March 2025. The year-over-year gains were the biggest in more than three years. Energy prices surged 8.5% from February.
Excluding volatile food and energy prices, so-called core producer prices rose a modest 0.1% from February and 3.8% from a year earlier. The gains in wholesale prices were smaller than economists had forecast.
The surge in prices complicates the work of the inflation fighters at the Federal Reserve, who have faced intense pressure from President Donald Trump to lower their benchmark interest rate. But some Fed policymakers are inclined to raise rates instead, as higher energy costs increase the inflation threat.
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Wholesale prices can offer an early look at where consumer inflation might be headed. Economists also watch it because some of its components, notably measures of health care and financial services, flow into the Fed’s preferred inflation gauge – the personal consumption expenditures, or PCE, price index.
The Labor Department reported last week that soaring gasoline prices pushed consumer prices up 3.3% last month from a year earlier, the biggest year-over-year increase since May 2024. Compared to February, March consumer prices jumped 0.9%, biggest gain in nearly four years.
