Wholesale prices in U.S. increased less than forecast in April

UNITED STATES wholesale prices rose less than forecast in April, restrained by a decline in food costs. 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. / BLOOMBERG FILE PHOTO
UNITED STATES wholesale prices rose less than forecast in April, restrained by a decline in food costs. 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. / BLOOMBERG FILE PHOTO

NEW YORK – United States 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)

  • Producer-price index rose 0.1 percent month to month (est. 0.2 percent) after 0.3 percent gain the previous month
  • PPI advanced 2.6 percent from a year earlier (est. 2.8 percent) after 3 percent gain in prior 12-month period
  • Excluding food and energy, core gauge increased 0.2 percent month to month (matching est.) and was up 2.3 percent year over year (est. 2.4 percent gain)

Key takeaways

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.

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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.

Other details

  • 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

Katia Dmitrieva is a reporter for Bloomberg News.

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