US producer prices increase at slowest pace since early 2021
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US WHOLESALE inflation continued to moderate in April, extending a year-long slowdown tied to falling commodities costs and improved supply chains.
The producer price index for final demand increased 2.3 per cent from a year ago, the slowest pace since early 2021, according to data out on Thursday (May 11) from the Bureau of Labor Statistics. The gauge rose 0.2 per cent from a month earlier.
Under the headline figure, 80 per cent of the monthly rise in the PPI was due to services. That included increases for portfolio management, food wholesaling and a handful of health care-related costs.
The data come a day after the consumer price index indicated inflation – though still high – is beginning to show promising signs of moderation. While shipping delays, shortages and other logistics headaches sharply drove up prices for a variety of goods in 2021 and the first half of 2022, a gradual improvement has been a key disinflationary force.
The PPI, which is a measure of wholesale prices, has slowed consistently on an annual basis.
The Federal Reserve, which raised interest rates above 5 per cent for the first time since 2007 last week, is now closely monitoring service prices for signs that inflationary pressures are meaningfully abating.
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Excluding the volatile food and energy components, the so-called core PPI increased 0.2 per cent last month and was up 3.2 per cent from April 2022. Also stripping out trade services, the PPI rose 0.2 per cent from a month earlier and 3.4 per cent from a year ago.
Several categories from the PPI report, notably in health care, are used to calculate the personal consumption expenditures price gauge – the Fed’s preferred inflation measure – that will be released later this month.
Prices of hospital outpatient care rose at a faster pace in April than a month earlier as did home health and hospice care. Meanwhile, hospital inpatient care and nursing home care costs moderated.
Costs of processed goods for intermediate demand, which reflect prices earlier in the production pipeline, dropped 0.4 per cent due to a decline in energy and food costs. Excluding these costs, the category rose by the most in nearly a year. BLOOMBERG
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