US Producer Prices Rise More Than Expected In April

After yesterday’s hotter-than-expected CPI, analysts expected US Producer Price inflation to slow modestly in April (from +11.2% YoY to +10.7% YoY) but just like CPI, PPI rose more than expected at +11.0% YoY (up 0.5% MoM)…

Source: Bloomberg

Core PPI missed expectations, rising 0.4% MoM (vs 0.6% MoM exp) and up 8.8% YoY (vs +8.9% YoY exp).

In April, the rise in the index for final demand is primarily attributable to a 1.3-percent advance in prices for final demand goods. The index for final demand construction increased 4.0 percent, while prices for final demand services were unchanged. 

A big slowdown in PPI in goods and services in April over March…

But on a YoY basis, PPI Goods prices are accelerating at a record pace while Services are barely off record highs…

While final demand PPI did slow its growth – still extremely high – pressure from the intermediate demand pull remains high (even though that is also rolling over)…

Source: Bloomberg

Finally, margin pressures continues to build as the PPI-CPI spread remains deep in the red for the 16th straight month…

Source: Bloomberg

The data suggest persistent inflation in the production pipeline will continue to filter through to consumer prices, which rose in April by more than forecast, driven by categories like shelter, food, airfare and new vehicles. Producers are likely to continue facing higher costs as Russia’s war in Ukraine and Covid-related lockdowns in China further strain supply chains, adding to the probability they’ll pass those expenses onto consumers.