US producer prices edge up in April

US producer prices edge up in April

File photo of a Boeing worker in the wing system installation area at their factory in Renton, Washington, on Feb 13, 2017. (REUTERS/Jason Redmond)
WASHINGTON: Amid a slight uptick in wholesale energy prices and a drop in food prices, producer prices edged up in April, for the fourth consecutive monthly increase, the Labour Department reported on Wednesday (May 9).As a result of the mixed bag, the annual inflation rate slowed sharply from March, which should relieve price pressures in the pipeline.
The Producer Price Index, which tracks the costs of wholesale goods and services, rose 0.1 per cent in April after a 0.3 per cent jump in the prior month, half the rate economists were expecting.Excluding the more volatile food and energy components, PPI rose 0.2 per cent, in line with the consensus forecast.But the inflation rate for the latest 12 months slowed to 2.6 per cent last month, four tenths lower than in March, and the slowest since December.Another closely watched measure, which excludes food, energy and trade services, also slowed four tenths to 2.5 per cent.
While the PPI does not exactly predict the more critical measures of consumer inflation, financial markets likely will take some comfort from the data that could ease the pressure on the Federal Reserve to raise interest rates faster."There are still inflation hotspots in the PPI, particularly transportation & warehousing, where a shortage of truck drivers has resulted in wage increases being passed, to an extent, in the form of price increases," Chris Low of FTN Financial said in a research note."But price increases are being offset by declines elsewhere," he said, adding "that should help calm Fed hawks."Freight trucking rose 0.2 per cent, and is up six percent compared to April 2017.
GASOLINE PRICES DROPAmong the key components of the wholesale inflation measures, energy goods rose 0.1 per cent. But within that category, diesel fuel rose 1.8 per cent and liquefied petroleum gas jumped 4.0 per cent.Those increases were offset by a 0.5 per cent drop in residential electric power, and a 0.4 per cent decline in gasoline.Food prices fell 1.1 per cent, but included some shocking figures, as it often does, such as a nearly 30 per cent decline in unprocessed finfish, and a 24 per cent drop in chicken eggs. Beef and veal fell six per cent.But Ian Shepherdson of Pantheon Macroeconomics cautioned that the food price decline is unlikely to be reflected in the Consumer Price Index for April due to be released Thursday."Note that the CPI measure of food prices often lags the PPI by a month, so the risk for tomorrow's CPI food component is still to the upside," he said.In the services category, which ticked up just 0.1 per cent in the month, auto and auto parts margins rose 1.4 per cent and airline passenger services increased 1.3 per cent, while traveller accommodation fell 3.2 per cent.Meanwhile, cellular phone services, which were much in the news for holding down overall inflation, saw a spike of 1.7 per cent in April, after falling in the prior two months.
Source: AFP/de
 Source : http://www.channelnewsasia.com/news/business/us-producer-prices-edge-up-in-april-10218694