The seasonally-adjusted Producer Price Index (PPI) for final demand fell 0.5% in April, as components recorded historic declines, the U.S. Bureau of Labor Statistics reported Thursday.
Economists had expected the overall PPI index to rise by 0.3%.
PPI, an inflation measure of the prices producers receive (and affect the prices charged consumers), has improved every month this year, compared to the previous month:
- January: Up 0.7%
- February: Up 0.2%
- March: 0.0% (Unchanged)
- April: Down 0.5%
Subtracting the volatile foods, energy, and trade service components, prices for final demand edged down 0.1% in April - the first decline in five years (-0.8% in April 2020).
The April decline in the PPI is attributable to a 0.7% decrease in prices for final demand services – the largest decline since the component index began in December 2009 – BLS reports:
“Over two-thirds of the broad-based decrease can be traced to margins for final demand trade services, which dropped 1.6 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)
“Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services fell 0.3 percent and 0.4 percent, respectively.”
The index for final demand goods was unchanged in April. Here, prices for goods such as general purpose machinery and equipment, residential electric power and utility natural gas increased, while prices paid for gasoline, gas fuels, diesel fuel, and primary basic organic chemicals declined.
The cost of chicken eggs plummeted 39.4%.
For the 12 months ended in April, the index for final demand prices rose an unadjusted 2.4%. Less foods, energy, and trade services, PPI increased 2.9% over the past year.
Like the unanticipated good news regarding producer prices in April, inflation at the consumer level was also lower than analysts had expected.
Compared to March, the seasonally-adjusted Consumer Price Index (CPI) rose 0.2%, less than the 0.3% rise analysts had expected. The annual inflation CPI rate was 2.3% - the smallest 12-month rise since February of 2021.
