Key inflation indicators were much stronger than expected in April, confirming that the pace of inflation is accelerating.
The final demand producer price index, which measures the prices paid by U.S. businesses for goods and services, rose 2.2% in April, the Labor Department said Thursday. The increase was 2.2% compared to the previous year, the largest increase in a year.
Economists had expected April prices to rise 0.3% from March and 2.2% from the same month last year.
The impact of April’s higher-than-expected numbers has somewhat softened as the previous month’s forecast was revised downward from a 0.2% increase to a 0.1% decline.
The so-called core producer price index, which excludes food and energy prices, rose 0.5% in April after rising 0.1% in March. Economists had expected a 0.2% rise. Over the year, core producer prices rose 2.4%.
Another measure, known as trade service prices, which also excludes wholesaler and retailer margins, rose 0.4% in April. Compared to a year ago, this “core core” metric has increased by 3.1%, which is the largest year-over-year increase since a year ago.
of producer price This measurement’s name derives in part from the fact that price changes are measured from the perspective of the seller of the product rather than the buyer. That is, it does not include sales or excise taxes or government subsidies paid to consumers. Shipping charges paid by the consumer are also excluded. The value of imported goods is not included because they are received by foreign producers rather than U.S. producers.
of final demand The name of this measurement derives in part from the fact that what is measured is the so-called “selling price.” user. That is, it is not a sale of components or materials used directly to create goods or services sold to consumers. These are products sold to customers who are government buyers, residential buyers, businesses purchasing capital goods, and foreign buyers.
The final demand services index rose 0.6% in April, the biggest increase since July 2023, when it rose 0.8%. Prices of final demand goods rose 0.4% in April after falling 0.2% in March.
Much higher-than-expected inflation numbers are likely to be seen as delaying interest rate cuts by the Federal Reserve. Officials say they need to see evidence that inflation will continue to decline before they start cutting the benchmark federal funds rate.
