Inflation’s grip on businesses loosened greatly in March, raising hopes that companies and consumers will suffer less from high prices as 2023 rolls on.
The U.S. government said plunging energy prices pulled the producer price index down 0.5% in March from February.
It marks the biggest decrease in producer prices in three years and follows other reports showing easing inflation on broader consumer prices.
Producer prices, also known as wholesale costs, track prices in the production process before they reach the consumer.
As a result, the producer price index can provide early signs of where inflation is headed.
Some producer price data is also used in the construction of the Federal Reserve’s preferred measure of inflation, and so the decline in producer prices means the Fed’s preferred index may also decline or come in very low when it is reported next week.
Lower prices paid by businesses on raw materials and other items means they are less likely to raise prices in the month
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