Producer Prices Jump 0.6%

The Producer Price Index (PPI) for final demand jumped a seasonally adjusted 0.6% for April, according to a Labor Department report (link opens as PDF) released today.

"Final demand" is a more comprehensive indicator than that for finished goods alone. It includes goods, services, and construction sold for personal or government use, capital investment, and export.

After increasing 0.5% for March due primarily to expanding trade margins, the prices in this latest report were boosted higher by increases in both final demand goods and final demand services. Each component jumped 0.6% from March to April, helping to push the overall index well past analyst expectations of a 0.2% rise. 

Source: Labor Department. 

Diving deeper, food provided the main push behind final demand goods' price increase. Food prices shot up 2.7%, compared to a slight 0.1% rise for energy.

On the services side, a fat 1.4% increase in trade margins helped push services prices higher, as did a 0.8% boost in transportation and warehousing.

Trade indexes measure the change in margins received by wholesalers and retailers. According to the Labor Department, over two-thirds of this month's services prices increase came from margin expansion.

Excluding more volatile food and energy prices, the overall index still surged 0.5% -- analysts had expected a 0.2% bump.

While April's boost in producer prices might help appease deflation worries generated by yesterday's import and export prices report, some analysts believe this latest rise is just an aftereffect of delayed spending from an especially cold winter, according to The Wall Street Journal..

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