Prices charged by U.S. businesses were up 11 percent in April compared with a year ago, the fifth straight month of the government’s producer price inflation gauge running at or above 10 percent.
The Department of Labor said Thursday that its Producer Price Index for final demand rose 0.5 percent in April compared with a month earlier, in line with expectations. But there the results for earlier months were revised up, bringing the 12-month figure above economists’ expectations for a 10.7 percent rise.
The report for March was revised up to show a 1.6 percent gain from February and the February report was revised up from a 0.9 percent gain to 1.1 percent. This indicates that inflation has been running even hotter than the earlier reports indicated.
The index for core final demand PPI—which excludes food, energy, and trade services (a category measured by markups rather than prices)—rose 0.6 for the month. Compared with a year ago, this is up 6.9 percent, down just two-tenths of a point from the March reading, which was revised up from 7.0 to 7.1 percent.
Producer prices for goods rose 1.3 percent in April compared with March. The March figure was left unchanged at 2.4 percent and the February figure was revised up to 2.2 percent to 2.3 percent. This slow down in price gains, however, was due to a slow down in the rise in energy prices and food prices. Excluding food and energy, goods prices rose one percent, down only a tick from March’s 1.1 percent.
Producer prices for final demand services were flat with the prior month. The February figure was revised up to show a 0.5 percent gain, up from 0.3 percent. The March figure was revised up to 1.2 percent from 0.9. Trade services margins fell 0.5 percent.
The Producer Price Index (PPI) is sometimes inaccurately described as an inflation index for wholesale prices. Although it was once called the wholesale price index, it has never been focused on wholesale prices. Instead, it is constructed by looking at what businesses that produce goods and services in the U.S. were paid for goods and services, while the better-known Consumer Price Index measures what consumers paid. The PPI excludes imports and doesn’t count sales taxes, since those are paid to foreign producers and governments. It also includes export prices, which are excluded from CPI because they are paid by non-U.S. consumers.
The PPI measures prices both for various stages of intermediate demand, businesses selling to other businesses, and final demand, which measures domestic producers selling goods for personal consumption, capital investment, government use, and exports. The widely reported headline number for PPI is the final demand figure.