RTTNews - Producer prices increased by a little more than expected in the month of April, according to a report released by the Labor Department on Thursday, with the increase in prices partly due to a rebound in food prices.
The report showed that the producer price index rose 0.3 percent in April following an unrevised 1.2 percent decrease in March. Economists had been expecting a slightly more modest increase in prices of about 0.2 percent.
A notable increase in food prices contributed to the slightly bigger than expected increase in producer prices, with food prices jumping 1.5 percent in April after falling in each of the two previous months. This marked the biggest increase in food prices since January of 2008.
The rebound in foods prices was partly due to a 43.7 increase in prices for fresh eggs, which followed a 9.5 percent decrease in March. Prices of beef and veal, milk and related products, pork, young chickens, and manufactured starch also turned higher.
At the same time, the report showed that energy prices edged down 0.1 percent in April following a 5.5 percent decrease in March. Falling prices for natural gas and residential electric power more than offset an increase in gasoline prices.
The Labor Department said that the core producer price index, which excludes food and energy prices, edged up 0.1 percent in April after coming in unchanged in the previous month. The modest increase came in line with economist estimates.
Some analysts pointed to a notable increase in prices of crude goods, the first stage of production, which rose 3 percent in April after edging down 0.3 percent in March. This marked the first increase in the prices of crude goods since July of 2008.
Commenting on the increase, Peter Boockvar, equity strategist at Miller Tabak said, So, the commodity disinflation story, as measured by government price data, has likely ended.
On an annual basis, the Labor Department said that producer prices were down 3.7 percent compared to the same month last year, a modest acceleration from the decrease of 3.4 percent that was reported for March.
Meanwhile, core prices were up 3.4 percent compared to same month last year, reflecting a slight deceleration from the 3.8 percent growth reported for the previous month.
The Labor Department is due to release additional inflation data on Friday, with its report on consumer prices expected to show that prices were unchanged in April after edging down 0.1 percent in March. Core consumer prices are expected to edge up 0.1 percent.
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