U.S. producer prices rise 6%

The Labor Department reported on May 13 that U.S. producer prices rose 6.0% in April from a year earlier, a faster pace than in March and the highest annual reading since December 2022. The Producer Price Index for final demand increased 1.4% from March, the biggest monthly gain since March 2022, according to the Bureau of Labor Statistics. The report showed price increases across both goods and services. It also added to a week of firmer U.S. inflation data after the April consumer price report. ### Which prices drove the April increase? The Bureau of Labor Statistics said final-demand goods prices rose 2.0% in April, while final-demand services increased 1.2%. More than three-quarters of the increase in goods was traced to a 7.8% jump in final-demand energy prices, the agency said. Gasoline posted one of the largest moves in the report. The BLS said more than 40% of the April increase in final-demand goods prices was tied to a 15.6% rise in gasoline. Jet fuel and diesel fuel also increased, alongside gains in fresh and dry vegetables, eggs for fresh use and residential natural gas. Food prices also moved up, though by less than energy. The index for final-demand foods rose 0.2% in April, while goods excluding foods and energy increased 0.7%, the report showed. ### How broad was the increase beyond fuel? April’s report showed gains outside commodity categories. The BLS said margins for final-demand trade services rose 1.9%, transportation and warehousing prices climbed 5.0%, and prices for other services advanced 0.6%. Trade services, a category that measures changes in margins received by wholesalers and retailers, accounted for more than half of the increase in final-demand services, according to the agency. Portfolio management, machinery and vehicle wholesaling, and airline passenger services were among the categories that moved higher in April. The annual comparison also accelerated. The 12-month increase in producer prices was 6.0% in April, up from an upwardly revised 4.3% in March, based on the BLS data. ### How did the number compare with forecasts? Reuters reported that economists polled ahead of the release had expected a 0.5% monthly increase in April producer prices. The actual 1.4% rise was nearly triple that estimate. CNBC, citing Dow Jones estimates, also said economists had expected a 0.5% monthly gain and a 4.9% annual increase. The 6.0% year-over-year reading exceeded that forecast. ### What does producer-price inflation measure? The Producer Price Index tracks prices received by producers for goods and services before those costs reach consumers. The measure is watched by investors, companies and Federal Reserve officials as an indicator of pipeline inflation pressures. U.S. News, in an Associated Press report published May 13, said higher wholesale prices can raise pressure on companies to pass costs through to shoppers. The report cited groceries and household goods as categories where consumers could feel the effect if businesses lift prices. ### How does this fit with the broader inflation picture? April inflation data have shown price pressures in both wholesale and consumer measures. CNBC reported that the consumer price index rose 3.8% in April from a year earlier, above expectations, before the producer-price report followed a day later. Reuters said analysts linked part of the recent price pressure to higher energy costs tied to the war with Iran and disruptions to shipping through the Strait of Hormuz. That assessment was attributed in Reuters’ coverage to economists reviewing the data and energy backdrop. May 29 is the scheduled release date for the Commerce Department’s Personal Consumption Expenditures price index for April, the next major U.S. inflation report. Federal Reserve officials and investors will also watch upcoming labor-market and retail-sales data for signs of whether price pressures are spreading further.