Wholesale prices rose 0.5% in April, more than expected

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

The
producer
price
index,
a
measure
of
what
producers
receive
for
the
goods
they
produce,
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,
core
PPI
also
increased
0.5%
compared
to
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.
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
in
turn
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,
fed
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
on
extended
hold
regarding
interest
rates.
Policymakers
have
said
in
recent
days
that
they
expect
inflation
to
trend
lower
through
the
year
but
need
more
evidence
that
it
is
convincingly
on
the
way
back
to
the
central
bank’s
2%
goal
before
cutting
rates.

Recent
data
points
have
not
been
encouraging.

The
consumer
price
index,
the
companion
to
the
PPI
that
measures
what
consumers
pay
rather
than
that
producers
receive,
has
shown
higher
than
expected
gains
through
the
first
part
of
2024,
fueling
fears
that
inflation
is
stickier
than
economists
and
policymakers
had
expected.

Similarly,
the
Fed’s
preferred
measure,
the
Commerce
Department’s
personal
consumption
expenditures
price
index,
also
has
been
running
hot
and
showing
inflation
running
just
shy
of
3%.

All
of
the
various
inflation
measures
are
showing
price
pressures
well
ahead
of
the
Fed’s
target.

In
addition,
various
consumer
surveys
have
shown
expectations
running
hot.
The
New
York
Fed’s
monthly
survey
released
Monday
showed
the
one-year
inflation
outlook
at
3.3%,
the
highest
since
November,
pushed
in
good
part
by
expectations
that
housing-related
costs
will
continue
to
increase.