News and Articles

• Headline PPI rose 1.4 percent in April, nearly triple the consensus forecast of 0.5 percent
• Annual producer inflation reached 6.0 percent, the highest twelve-month reading since December 2022
• Final demand energy index jumped 7.8 percent with gasoline prices climbing 15.6 percent
• Processed intermediate goods rose 9.4 percent year on year and unprocessed goods surged 20.9 percent
• Trade services margins increased 2.7 percent, signalling early tariff pass-through into wholesale prices

Wholesale prices in the United States accelerated sharply in April, with the Producer Price Index posting its largest monthly increase in more than four years and reinforcing concerns that input cost pressures are spreading well beyond the energy sector. The Bureau of Labor Statistics reported on 13 May that the index for final demand rose 1.4 percent on a seasonally adjusted basis, almost three times the 0.5 percent gain economists had expected, and the steepest reading since March 2022.

On an unadjusted twelve-month basis, the index advanced 6.0 percent, marking the highest annual reading since December 2022. The March figure was also revised higher to a 0.7 percent monthly increase. Final demand goods prices rose 2.0 percent in April, while services climbed 1.2 percent, the strongest services move since March 2022. Excluding food, energy and trade services, the core index increased 0.6 percent, taking the annual core reading to 4.4 percent.

Energy was the largest single driver of the goods-side advance, with the final demand energy index jumping 7.8 percent. Gasoline prices alone surged 15.6 percent during the month, lifted by pump prices that pushed well past four dollars a gallon as supply pressures connected to the Iran conflict continued to feed through. Even so, services accounted for roughly 60 percent of the overall monthly move, with trade services margins climbing 2.7 percent and machinery and equipment wholesaling margins rising 3.5 percent.

Further up the production chain, processed goods for intermediate demand rose 2.7 percent for the month and 9.4 percent year on year, the strongest annual gain since October 2022. Unprocessed goods for intermediate demand climbed 4.1 percent in April and 20.9 percent over twelve months, the sharpest annual reading since September 2022. Stage 1 intermediate demand prices were 8.9 percent higher than a year earlier, the steepest twelve-month increase since October 2022.

The report followed a Consumer Price Index reading earlier in the week showing annual inflation at 3.8 percent, the highest since May 2023. Treasury yields drifted higher after the release and equity futures weakened, with markets pricing in roughly a 39 percent probability of a Federal Reserve rate hike by the end of 2026. For procurement teams, the data points to continued upstream pressure on raw material, fuel, freight and chemical input costs in the second quarter, with tariff pass-through effects beginning to appear in wholesale services margins for the first time.