The producer price index (PPI) for final demand fell 0.1% in March, and it is up 3.3% annualized. The weakness in March can be attributed to energy, which dropped 2.9%; specifically, gasoline was down 8.3%. Excluding food and energy, the final demand goods PPI was up 0.4%. Inflation is moving toward the Federal Reserve’s target, but the PPI decline in March is a reminder that there will be some bumps along the way. The reduced slack in the economy is putting upward pressure on inflation and some Federal Reserve officials have expressed desire to raise rates again in order to stay ahead of any inflation.

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