Producer Prices Rise
U.S. wholesale prices rose more than expected in April (MarketWatch, subscription).
What’s going on: The producer price index for final demand goods “jumped 0.5% in April in another sign of sticky inflation.”
- Prices in April rose 2.2% over the past year, the highest level in 12 months.
- Wall Street Journal–polled economists had forecast a 0.3% increase.
Why it’s important: Wholesale costs can predict coming inflationary trends.
Core PPI: Core PPI—a separate measure of wholesale prices that excludes food and energy costs—rose 0.4% in April. That’s twice as much as economists had expected.
- Core PPI in the past year rose to 3.1%, from 2.8%.
- The Federal Reserve sees core producer prices as a better predictor of future inflation than the overall number.
The last word: “The rate of inflation appears to have gotten stuck well above the Federal Reserve’s 2% annual goal, keeping the central bank from cutting interest rates. The Fed could still cut rates later this year—offering relief to homebuyers and other borrowers—if inflation resumes a downward trend. For now, it’s still an open question.”