WASHINGTON (Reuters) – U.S. producer prices rose more than expected in April amid sharp increases in the costs of services and goods, indicating that inflation remained high at the start of the second quarter .
The producer price index for final demand rose 0.5% last month after falling a downwardly revised 0.1% in March, the Labor Department’s Bureau of Labor Statistics said Tuesday.
Economists polled by Reuters had forecast a 0.3% rise in the PPI, following a 0.2% rise previously announced in March. In the 12 months to April, the PPI rose 2.2% after climbing 1.8% in March.
Inflation jumped in the first quarter amid strong domestic demand, after slowing for much of last year. Economists are optimistic that prices will resume their downward trend this quarter as the labor market cools.
Financial markets expect the Federal Reserve to begin its easing cycle in September, although some economists believe the first interest rate cut could come in July.
Earlier this month, the US central bank left its benchmark overnight interest rate unchanged at the current range of 5.25% to 5.50%, where it has been since July. The Fed has increased its key rate by 525 basis points since March 2022.
Wednesday’s consumer price data could offer new clues about the timing of the long-awaited rate cut.
(Reporting by Lucia Mutikani; editing by Andrea Ricci)
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