Rebound In US Wholesale Prices Signals Inflation Pressures
The bigger-than-forecast rebound in April wholesale prices indicates inflation pressures continue to build in the US economy and that March’s decline was short-lived, Labor Department data showed Thursday.
It found that the Producer-Price Index (PPI) increased 0.5% (forecast was 0.2% rise) following a 0.1% decline the prior month. Wholesale prices rose 2.5% from a year earlier, the most since February 2012 (forecast was 2.2%), after 2.3% gain.
Elsewhere, PPI excluding food and energy rose 0.4% from the prior month and was up 1.9% from April 2016.
The advance in wholesale prices was fairly broad-based, indicating that inflation is picking up throughout the economy. Signs of increasing global demand could continue to drive up costs of some commodities and allow price pressures to build up in the production pipeline.
The jump in a gauge excluding volatile food, energy and trade services increases chances that consumer inflation will be sustained around the Federal Reserve’s 2 percent goal, supporting forecasts for interest-rate hikes in the coming months.
Excluding volatile items of food, energy, and trade services, producer costs rose 0.7 percent after climbing 0.1 percent the previous month; up 2.1 percent from a year earlier.
About 40 percent of the increase in goods prices was due to gains excluding food and energy. More than a quarter of the advance in services prices is attributable to prices for securities brokerage, dealing, investment advice and related services.