US producer prices rose more than expected in April, marking their biggest increase since early 2022 and the latest sign of accelerating inflation amid the war with Iran.
The producer price index for final demand jumped 1.4% last month, after a revised 0.7% rise in March, the Labor Department’s Bureau of Labor Statistics said on Wednesday. Last month’s increase was the strongest since March 2022 and covered all goods and services.
Economists surveyed by Reuters had forecast a 0.5% rise in the PPI, after a 0.5% increase previously reported for March.
Producer prices have surged this year, partly due to higher energy costs, as the conflict between the United States and Israel against Iran disrupted shipping in the Strait of Hormuz. This conflict is straining global supply chains, causing shortages of a wide range of products, including fertilizers, aluminum, and consumer goods.
Over the 12 months to April, the PPI surged 6.0%, the biggest increase since December 2022, following a 4.3% rise in March. Some of the spike in the year-over-year PPI rate is due to the drop-off of low numbers from last year’s calculation.
Inflation is becoming more widespread, posing a challenge to the Federal Reserve. The BLS said on Tuesday that the Consumer Price Index (CPI) continued to rise in April, with the annual inflation rate notching its largest increase in three years.
The central bank is monitoring personal consumption expenditure price indices to reach its 2% inflation target.
Before the release of the PPI report, economists estimated that core PCE inflation, excluding volatile food and energy components, could rise by 0.4% in April after a 0.3% increase in March. Estimates for the year-on-year increase in core PCE inflation were at 3.4%, up from 3.2% in March.
Last month, the Fed held its benchmark overnight interest rate in a range of 3.50% to 3.75%.
