NEW YORK: US producer prices barely rose in April after strong gains in the first quarter, held down by a moderation in the cost of both goods and services, which could ease fears that inflation pressures were rapidly building up.The slowdown in wholesale price growth reported by the Labor Department on Wednesday is likely temporary as manufacturers have been reporting paying more for raw materials.
Economists also expect oil prices to surge after President Donald Trump pulled the United States out of an international nuclear deal with Iran.Inflation isnt breaking out, although with Trump exiting the Iran nuclear deal, higher energy prices could kick-start a new round of inflation at the producer level, said Chris Rupkey, economist at MUFG in New York.The Labor Department said on Wednesday its producer price index for final demand edged up 0.1 per cent last month after increasing 0.3 per cent in March.
That lowered the year-on-year increase in the PPI to 2.6 per cent from 3.0 per cent in March.Economists polled by Reuters had forecast the PPI gaining 0.2 per centlast month and rising 2.8 per cent from a year ago.A key gauge of underlying producer price pressures that excludes food, energy and trade services also nudged up 0.1 per cent last month.
The so-called core PPI had increased by 0.4 per cent in each of the past three months.In the 12 months through April, the core PPI rose 2.5 per cent after jumping 2.9 per cent in March.
Core goods prices increased 0.3 per cent in April, matching Marchs gain.Stocks on Wall Street were trading higher, with shares of energy companies getting a boost from surging oil prices after the United States exited the Iran nuclear deal and imposed the highest level of sanctions against the Opec member.
Oil prices rose more than 2.5 per cent.
US Treasury yields rose while the dollar fell against a basket of currencies.Inflation is flirting with the Federal Reserves 2 per cent target.
The US central banks preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, increased 1.9 per centyear-on-year in March and is expected to breach its target in the coming months.