11:03 AM EDT, 04/11/2024 (MT Newswires) -- Producer prices logged the biggest annual increase since April 2023 while wholesale costs eased sequentially in March, the Bureau of Labor Statistics reported Thursday, a day after hotter-than-expected consumer inflation data largely wiped out pricing for a June interest rate cut by the Federal Reserve.

The US producer price index increased 2.1% last month on year-over-year basis, accelerating from 1.6% in February, according to the BLS. The Bloomberg-polled consensus estimate called for a 2.2% increase.

The final demand services index climbed 2.8% on an annual basis, while goods nudged 0.8% higher. The energy measure dropped 1%, while food costs moved up by 1%.

Wholesale cost growth slowed to 0.2% in March from 0.6% in February, trailing the 0.3% pace projected by analysts. The index for final demand goods fell back into contraction territory, at 0.1%, while the services measure was flat at 0.3% growth.

BLS data on Wednesday showed that March consumer inflation came in higher than predicted. Markets widely expect the central bank's Federal Open Market Committee to keep its rates unchanged on May 1, according to the CME FedWatch Tool. The odds for a 25-basis-point cut in June were at 20% on Thursday, up from 16% on Wednesday but sharply down from 59% a week ago.

"We have to admit that the likelihood of imminent policy easing from the (Fed) appears more remote than previously thought," ING wrote in a note on Thursday. "We now think a third quarter start point for Fed easing, either in July or, more likely, September, looks like a more credible call than June."

Minutes from the FOMC's March policy meeting showed Wednesday that risks to the inflation outlook were "tilted slightly to the upside" amid geopolitical tensions, though most participants agreed that rate cuts would likely be appropriate at some point this year.