Wholesale prices rose 0.5% in April, more than expected

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The producer price index, a measure of what producers receive for the goods they produce, increased 0.5% in April and was up 2.2% on a 12-month basis, the biggest gain in a year. The core PPI also rose 0.5% compared with the 0.2% Dow Jones estimate. Services prices boosted the wholesale inflation reading, climbing 0.6% and accounting for about three-quarters of the headline gain.

Wholesale prices jumped more than expected in April, putting up another potential roadblock to interest rate cuts anytime soon.

The producer price index, a gauge of prices received at the wholesale level, increased 0.5% for the month, higher than the 0.3% Dow Jones estimate, the Labor Department’s Bureau of Labor Statistics reported Tuesday. However, the March reading was revised from an initially reported 0.2% gain to a decline of 0.1%.

Stripping out volatile food and energy prices, the core PPI also rose 0.5% compared with the 0.2% Dow Jones estimate. Excluding trade services from that core group showed a 0.4% increase on the month and 3.1% on a 12-month basis, the highest level since April 2023.

On a year-over-year basis, wholesale inflation rose 2.2%, also the highest in a year. The core PPI inflation was at 2.4%, the biggest annual move since August 2023. Both numbers were in line with estimates from Reuters.

Stock market futures were around breakeven following the data while Treasury yields were mixed.

“Sticky inflation looked downright stuck this morning after a much hotter-than-expected inflation reading. But with last month’s numbers revised lower, this report may not have been as much of an upside shock as it first appeared to be,” said Chris Larkin, managing director of trading and investing for E-Trade from Morgan Stanley.

Services prices boosted the wholesale inflation reading, rising 0.6% and accounting for about three-quarters of the headline gain, while the final demand goods index increased 0.4%. The services increase was the biggest monthly gain since July 2023, the BLS reported.

Portfolio management helped drive the services costs, rising 3.9% on the month.

Goods prices as measured by the PPI rose 0.4%, reversing a 0.2% decline, led by a 2% increase in the energy index, which included a 5.4% surge in gasoline prices. The final demand index for food fell 0.7%.

The latest inflation data comes with the Federal Reserve

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The full article is available here. This article was published at CNBC Economics.