Published: Fri, May 11, 2018
Economy | By Melissa Porter

US Producer Prices Edge up 0.1% April

US Producer Prices Edge up 0.1% April

While oil prices contribute to the headline inflation number, they are excluded from the core inflation number that the Federal Reserve looks at to determine interest rates.

The Labor Department reported its consumer price index rose 0.2 percent after slipping 0.1 percent in March. In the 12 months to end-April, the CPI increased 2.5%, the biggest gain since February 2017, after rising 2.4% in March. Excluding food and energy, the core gauge was up a below-forecast 0.1% from March - the least since November - and 2.1% from a year earlier, compared with projections for 2.2%.

USA consumer prices rose by less than forecast in April as costs for automobiles and airfares declined, reducing chances that inflation will run significantly above the Federal Reserve's target in coming months. The US Federal Reserve tracks a different inflation measure, which is now flirting with the Fed's 2% target.

While rising gasoline prices are pinching Americans' wallets, fuel is providing only a modest boost to the broad CPI, which rose 2.5% in April from a year earlier.

Last month's slowdown in wholesale price growth is likely temporary as manufacturers have been reporting paying more for raw materials. In April, gasoline prices jumped 3.0 percent, even as other energy costs went down.

Further increases are likely after crude oil prices jumped to three-and-a-half-year highs on Wednesday in the wake of US President Donald Trump's decision to pull the US out of an global nuclear deal with Iran. Over the last 12 months, the all-items index rose 2.5%. Economists were expecting to see a 0.2% rise in price pressures.

Apparel prices rose and costs of household furniture increased 0.5 percent last month, the largest in three years.

Among the categories where prices declined were airfares, new and used cars and trucks, and recreation. A separate report released May 10 by the Labor Department showed average hourly earnings adjusted for inflation rose 0.2% from April 2017. The advance in April was led by the index for final demand trade services, which increased 0.2 percent. The unemployment rate dropped to near a 17-1/2-year low of 3.9 per cent in April from 4.1 per cent in March. The cost of motor vehicle insurance fell for the first time in a year.

Competition for workers is expected to push up wage increases, which have remained moderate.

This story has not been edited by Firstpost staff and is generated by auto-feed.

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