U.S. Producer Prices Jump 1.4% In April, Much More Than Expected

(RTTNews) - Following yesterday's consumer price inflation data, the Labor Department released a separate report on Wednesday showing producer prices in the U.S. shot up by much more than expected in the month of April.

The Labor Department said its producer price index for final demand jumped by 1.4 percent in April after climbing by an upwardly revised 0.7 percent in March.

Economists had expected producer prices to rise by 0.5 percent, matching the increase originally reported for the previous month.

The report also said the annual rate of growth by consumer prices soared to 6.0 percent in April from 4.3 percent in March, coming in well above economist estimates for a 4.9 percent surge and marking the fastest growth since a 6.4 percent spike in December 2022.

"The jump in input prices portends further increases for consumer prices in May," said Nationwide Senior Economist Ben Ayers. "We expect annual CPI inflation to move above 4.0 percent in May with energy prices still highly elevated more than two months into the Iranian conflict."

He added, "With inflation still trending higher, we expect the hawkish wing of the FOMC to advocate for an extended pause in interest rates even with incoming Fed Chair Kevin Warsh likely to prefer to lower rates over time."

The bigger than expected monthly increase by producer prices marked the largest advance since a 1.7 percent jump in March 2022.

Energy prices helped lead the way higher during the month, spiking by 7.8 percent in April after soaring by 10.1 percent in March.

The extended surge in energy prices accounted for more than three-quarters of the 2.0 percent jump in prices for goods.

The report also showed a sharp increase in prices for services, which shot up by 1.2 percent in April after rising by 0.2 percent in March.

Prices for transportation and warehousing services spiked by 5.0 percent, while prices for trade services surged by 2.7 percent and prices for other services crept up by 0.1 percent.

The Labor Department said core producer prices, which exclude prices for food, energy and trade services, climbed by 0.6 percent in April after inching up by 0.2 percent in March.

The annual rate of growth by core producer prices accelerated to 4.4 percent in April from 3.7 percent in March, surging at the fastest rate since a 4.5 percent spike in February 2023.

On Tuesday, the Labor Department released a separate report showing consumer prices in the U.S. increased in line with economist estimates in the month of April.

The Labor Department said its consumer price index climbed by 0.6 percent in April after advancing by 0.9 percent in March. The growth matched expectations.

The report also said the annual rate of growth by consumer prices accelerated to 3.8 percent in April from 3.3 percent in March, which was also in line with estimates.

Excluding food and energy prices, the core consumer price index rose by 0.4 percent in April after inching up by 0.2 percent in March. Economists had expected core prices to increase by 0.3 percent.

The annual rate of growth by core consumer prices accelerated to 2.8 percent in April from 2.6 percent in March, coming in slightly above estimates for a 2.7 percent jump.