(Bloomberg) -- U.S. wholesale prices rose less than forecast in April, restrained by the biggest decline in food costs since 2016, a Labor Department report showed Wednesday.
Highlights of Producer Prices (April)
Beyond the drop in costs of food, which was the largest since August 2016 and included slumps in beef, eggs and vegetables, the data showed higher costs for materials used in durables production and construction.
Steady demand from consumers and companies, steel and aluminum tariffs, and the threat of further actions by the U.S. government on trade, are underpinning prices for some items while several U.S. firms have cited escalating logistics costs amid a shortage of truckers and new regulations.
The PPI, which measures wholesale and other selling prices at businesses, underscore the view that price pressures in the production process are firming up gradually. The gauge offers a view into the direction of input costs businesses face.
The report showed no change in the final demand cost of goods and a 0.1 percent increase in services prices.
The PPI excluding food, energy, and trade services, a measure some economists prefer because it strips out the most volatile components, rose 2.5 percent from April 2017.
Inflation is gradually picking up as the Federal Reserve anticipates. Policy makers maintained the benchmark interest rate this month and are expected to boost it at their June meeting.
What Our Economists SayProducer prices had been accelerating swiftly since the middle of last year and in turn fomenting concerns that consumer prices would follow. The April PPI results suggest that the pickup is less dramatic than originally thought. This is not only consistent with Fed officials’ sanguine treatment of rising inflation of late, it is also consistent with a less bullish outlook for coordinated global growth -- as reflected in several barometers of European economic activity of late.
-- Carl Riccadonna, Bloomberg Economics
Read more for the full reaction note from Bloomberg Economics.
- Excluding the volatile categories of food, energy, and trade services, producer costs rose 0.1 percent from the previous month following a 0.4 percent increase
- Energy goods prices rose 0.1 percent after a 2.1 percent drop in the prior month
- Profit margins at providers of traveler accommodations dropped 3.2 percent, the most since September 2009; declined 1.2 percent for legal services, biggest drop in records to 2009
- Cost of navigation equipment jumped 2.1 percent, most in data back to July 2004
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