Wholesale prices in April rose at their fastest rate in four years. The Producer Price Index, a measure of the costs that businesses pay for goods and services, rose 1.4% in April from the prior month, and is up 6% from a year earlier, the Bureau of Labor Statistics said Wednesday. It was the fastest one-month increase in the index since March 2022.
The news came one day after the government reported that the Consumer Price Index rose 3.8% in April from a year earlier, the fastest pace of inflation in nearly three years.
Economists watch the PPI closely because it gives an early look at how costs are filtering through the supply chain. The U.S.-Israeli war with Iran, which began in late February, has driven up energy prices around the world. That, in turn, has pushed up costs for manufacturers, which rely on oil and natural gas to fuel their plants and as a raw material for many of their products. And it has raised the cost of shipping those products by land, sea and air.
The April numbers represent an acceleration from a more modest increase in the PPI in March. The Bureau of Labor Statistics initially reported that producer prices rose just 0.5% in March, which economists took as an encouraging sign that the energy price shock was not setting off a broader inflationary spiral.
The data released on Tuesday, however, called that optimism into question. The increase in March was revised up slightly, to 0.7%. And April’s gain was nearly triple what forecasters had expected.
Energy prices paid by producers jumped 7.8% in April after rising 10.1% in March.
“These numbers show ample evidence of both tariff-related pass-through and the energy price shock rippling widely through the economy, suggesting that consumer price inflation may get significantly firmer in the months to come,” Stephen Stanley, chief U.S. economist at Santander, wrote in a note to clients.
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