The March Producer Price index from the Department of Commerce soared 1.6% from February on top of a 2.5% rise over the prior two months.

More than half of the gain was higher oil and natural gas prices, said Jim Haughey, Newport Communications' senior economist. Most of the rest was the spillover of higher energy costs into other markets and a 4.5% jump in auto prices while rebates were temporarily suspended. The underlying inflation rate is still near 1.0% although it is expected to creep up toward 2.0% by the end of next year with a stronger economy and a weaker dollar that boosts import prices.
"Most of year-to-date increases are now reversing as spot market crude oil prices have fallen from the high $40s to the high $20s and Detroit has brought back rebates for most models," Haughey said. "OPEC got too greedy and overcompensated for missing Iraqi oil shipments. They also appear to have overestimated how long Iraqi supplies would be lost. Maybe they got a tip from the Iraqi Information Minister."
Both LTL and TL freight rates rose 0.5% in March from fuel cost adjustment clauses. Truck and trailer prices were largely unchanged.
Meanwhile, retail sales rose an unexpectedly strong 2.4% in March from February according to the Census Bureau. January and February were both revised significantly higher. Hindsight suggests that February's 1.4% sales drop was due more to bad weather than war concerns.
"Remember that it canceled Presidents Day auto sales events throughout the East. But snowed in shoppers made up for lost time in March, especially at auto dealers -- where sales rose 5.3% -- and building material dealers, where sales surged 7.9%."
Grocery, drug store and department store sales together were unchanged from February. The expected month-to-month sales gain in the spring is 0.4 to 0.5%. This is about the average of February and March together.
Two-thirds of the March gain was higher auto sales; March sales were quite high so sales this spring are not likely to gain much, if any.
Retail sales increased at a 6% annual rate in the first quarter strongly suggesting that GDP growth will be higher than the 0.5 to1.0% generally expected.