Wholesale prices in the U.S. rose in April by the most in more than a year, reflecting broad-based gains that signal the threat of deflation is ebbing as the economy improves.
The 0.6% increase in the producer price index was the biggest since September 2012 and exceeded all estimates in a Bloomberg survey of 69 economists, figures from the Labor Department showed today. Over the past 12 months, costs climbed 2.1%. Food costs jumped by the most in three years.
A rebound in pricing power could be taking shape as global growth begins to pickup. Higher prices will probably ease concern among some
It "could be a sign you're seeing some pressure developing," Scott Brown, chief economist at Raymond James & Associates Inc. in
The April PPI increase followed a 0.5% gain the prior month. The median estimate in a Bloomberg survey of economists called for an advance of 0.2%. Estimates ranged from a drop of 0.2% to a 0.5% gain.
The advance from the same month a year before was the biggest since March 2012 and followed a 1.4% rise in the year to March.
Wholesale food expenses increased 2.7% in April, the biggest jump since February 2011, led by an 8.4% surge in the costs of meats that was the biggest since 2003. A confluence of events ranging from drought in the West to porcine epidemic diarrhea is pushing up prices for beef, pork and other foods.
At Greeley, Colorado-based
Energy costs increased 0.1% last month after a 1.2% decline in March.
The so-called core measure, which strips out volatile food and fuel, increased 0.5% after rising 0.6% in March. It was projected to rise 0.2%, the survey median showed. It rose 1.9% in the 12 months ended April, the most since December 2012.
The cost of services increased 0.6% in April, reflecting higher costs for clothing, machinery and airline fares.
Prices for goods also climbed 0.6% last month, paced by light trucks and a record jump in ethanol.
Producer prices for finished products related to consumer spending increased 0.7% in April after rising 0.6% the month before. The selling prices received by businesses for goods and services going toward consumption represent about 68% of the revamped PPI, which help to provide insight into longer-term changes in the CPI.
Fed officials led by Chair
The Fed's Open Market Committee pared its monthly asset- buying to $45 billion, its fourth straight $10 billion cut, and said further reductions in "measured steps" are likely.
Producer prices are one of three monthly inflation gauges from the Labor Department. The consumer price index, the broadest of the three measures, may have climbed 0.3% in April, according to the Bloomberg survey median. That report is out tomorrow.