April producer prices edge up 0.2 percent
Producer prices rose by a smaller-than-expected 0.2 percent in April after gasoline prices sank, government data showed on Tuesday, but core inflation at the producer level posted a larger advance.
Economists polled by Reuters had expected that producer prices - a gauge of costs at the farm and factory gate - would rise 0.4 percent after mounting 1.1 percent in March.
The dollar slipped on the moderate reading in headline PPI but stock futures and U.S. government bonds retreated as investors took fright at the more elevated core measure.
Core producer prices, which strip out volatile energy and food costs, increased by 0.4 percent. That was twice the rate that had been forecast. Core producer prices over the last 12 months rose 3.0 percent, the largest gain since December 1991.
“The PPI core was high, both in absolute terms and relative to expectations,” said Pierre Ellis, senior economist at Decision Economics in New York.
Gasoline prices at the producer level fell 4.6 percent, but they were up 23 percent over the past year pay day loan. Overall producer prices were up 6.5 percent on a year-on-year basis.
Food prices were unchanged in April, although within that category the price of rice jumped by 17.4 percent, the largest rise since 1993.
Soaring energy costs have buoyed producer prices and spilled into broader measures of inflation in a worrying fashion for the Federal Reserve, even as it has slashed interest rates to buffer growth from the housing crisis.
Filed under: economics by Fred