WASHINGTON (Reuters) – U.S. producer prices rose more than expected in April amid strong gains in the costs of services and goods, indicating that inflation remained elevated at the start of the second quarter.
The producer price index for final demand rose 0.5% last month after falling a downwardly revised 0.1% in March, the Labor Department’s Bureau of Labor Statistics reported Tuesday.
Economists polled by Reuters had forecast the PPI would rise 0.3%, following a previously reported 0.2% rise in March. In the 12 months to April, the PPI rose 2.2%, after rising 1.8% in March.
Inflation increased in the first quarter, in a context of strong domestic demand, after having slowed down for much of last year. Economists are optimistic that prices will resume their downward trend this quarter as the labor market cools.
Financial markets expect the Federal Reserve to begin its easing cycle in September, although some economists believe that the first interest rate cut could occur in July.
The US central bank earlier this month left its benchmark overnight interest rate unchanged at the current range of 5.25%-5.50%, where it has been since July. The Fed has raised its key rate by 525 basis points since March 2022.
Consumer price data released on Wednesday may offer new clues about the timing of the long-awaited rate cut.
(Reporting by Lucia Mutikani; editing by Andrea Ricci)
