Seasonal factors deepened the decline in gasoline prices while increasing price sensitivity pulled food prices into negative territory for the fifth month, giving March an overall below-expectations producer price index with an unchanged core rate.

The Bureau of Labor Statistics yesterday reported that the broadest measure of producers’ prices dropped 1.2%, well under the expectation for zero change. The core rate was unchanged and had been expected to be up a tenth.

The PPI has dropped 3.5% in a year, the largest annual decline since the beginning of 1950.

Intermediate goods prices fell 1.5% and raw materials prices were down 0.3% in March, the eighth monthly decline for both categories.

Cigarette prices rose 2.6% in March. Since the PPI does not capture tobacco taxes, it will not experience the bump up in the April report expected for the CPI’s April report, reflecting a huge increase in federal excise taxes. The CPI March report is due Wednesday.

Expectations in a Market News International survey of economists centered on no change in the finished goods index for March and a core rate up 0.1%.

— Market News International 

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