United States wholesale prices recorded their largest annual increase in more than three years in April, driven by surging energy and services costs in another sign inflationary pressures are accelerating amid the Iran conflict and ongoing tariff impacts.
The monthly producer price index (PPI) rose a seasonally adjusted 1.4% in April, well above economists’ forecasts for a 0.5% increase and higher than the upwardly revised 0.7% rise in March, according to data released Wednesday by the Bureau of Labor Statistics (BLS).
The monthly increase marked the largest gain since March 2022.
On an annual basis, producer prices rose 6%, representing the strongest increase since December 2022.
Core producer prices, which exclude food and energy, climbed 1.0% during the month, compared with expectations for a 0.3% rise. Excluding food, energy and trade services, the index increased 0.6%.
Energy prices were the primary driver behind the sharp increase in wholesale inflation, echoing consumer inflation data released a day earlier, although the report also showed signs that price pressures were broadening across the economy.
The BLS said around three-quarters of the rise in goods prices was linked to a 7.8% jump in final demand energy prices.
More than 40% of that increase came from a 15.6% surge in gasoline prices during a month in which fuel costs climbed well above US$4 a gallon as the Iran conflict disrupted global energy markets.
While inflation pressures have largely been attributed to the war and tariffs introduced by President Donald Trump last year, the latest PPI data suggested price increases were becoming more widespread.
The services index rose 1.2%, marking its largest monthly increase since March 2022. Around two-thirds of the gain reflected a 2.7% increase in trade services, indicating tariff-related costs may increasingly be flowing through to consumers.
Margins for machinery and equipment wholesaling rose 3.5%, while professional and commercial equipment wholesaling margins increased 3.6%.
Retail margins for computer hardware, software and supplies also edged higher and were up 10.1% from a year earlier, supported by strong artificial intelligence-related spending.
Retail margins also increased for apparel, jewellery, footwear and accessories, as well as health, beauty and optical products, suggesting businesses continued passing higher import costs onto consumers.
Margins for fuels and lubricants retailing surged 26.6%, while freight transportation costs by road also increased.
Prices for legal services and wholesale airfares rose, although airfare growth slowed compared with March.
Offsetting some of the gains, portfolio management fees declined 2.4%, while margins for food retailing and for metals, minerals, and ores wholesaling also decreased.
Wholesale goods prices increased 2.0% in April following a 1.9% rise in March.
Food prices rebounded 0.2%, with fresh and dry vegetable prices jumping 13.5%.
Excluding food and energy, producer goods prices climbed 0.7% after increasing 0.3% in each of the previous two months. Core goods prices rose 4.6% compared with a year earlier, supported by gains in industrial chemicals, iron and steel scrap, and household furniture.
The producer inflation data followed Tuesday’s consumer price report, which showed annual inflation rising at its fastest pace in three years.
Core consumer inflation remained comparatively subdued at 2.8%, although it stayed well above the Federal Reserve’s 2% target, reinforcing expectations policymakers will keep interest rates elevated while monitoring the effects of the Iran conflict and tariffs.
Financial markets are now pricing in little chance of an interest rate cut for the remainder of the year, with expectations for a potential rate hike at around 27.9% following the PPI release, according to the CME Group FedWatch Tool.
The Federal Reserve has maintained its benchmark interest rate within a range of 3.5% to 3.75% as inflation remains persistent and labour market conditions continue to show resilience.
