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U.S. Producer Price Growth Exceeds Estimates In April

Producer prices in the U.S. increased by more than expected in the month of April, according to a report released by the Labor Department on Tuesday.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in April after a revised 0.1 percent dip in March.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month.

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The report also said the annual rate of producer price growth accelerated to 2.2 percent in April from a downwardly revised 1.8 percent in March.

The year-over-year producer price growth was expected to inch up to 2.2 percent from the 2.1 percent originally reported for the previous month.

“This report underscores Fed concerns that the path of disinflation has stalled, requiring a higher for longer policy stance to combat seemingly entrenched inflation,” said Quincy Krosby, Chief Global Strategist for LPL Financial.

She added, “And once again, the probability for interest rate cuts have been slowed as the Fed’s timetable to initiate a rate easing cycle is thwarted by stubbornly higher prices.”

Prices for services led the monthly advance, climbing by 0.6 percent in April after edging down by 0.1 percent in March and showing the biggest increase since July 2023.

While prices for transportation and warehousing services fell by 0.6 percent, prices for trade services increased by 0.8 percent and prices for other services rose by 0.6 percent.

The report also showed a significant rebound by energy prices, which shot up by 2.0 percent in April after tumbling by 1.3 percent in March.

Meanwhile, the Labor Department said food prices slid by 0.7 percent in April after rising by 0.4 percent in the previous month.

Excluding prices for foods, energy, and trade services, core producer prices climbed by 0.4 percent in April after edging up by 0.2 percent in March.

The annual rate of growth by core producer prices accelerated to 3.1 percent in April from 2.8 percent in March, showing the fastest growth since a 3.4 percent jump in April 2023.

On Wednesday, the Labor Department is scheduled to release a separate report on consumer price inflation in the month of April.

Consumer prices are expected to climb by 0.4 percent in April, matching the increase seen in March. Core consumer prices, which exclude food and energy prices, are expected to rise by 0.3 percent in April after climbing by 0.4 percent in March.

The annual rate of consumer price growth is expected to dip to 3.4 percent in April from 3.5 percent in March, while the annual rate of core consumer price growth is expected to slow to 3.6 percent from 3.8 percent.

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