Producer inflation makes biggest jump in year as possible warning sign for future economy

A measure of wholesale inflation that tracks prices before they reach consumers rose to its fastest annual rate since April 2023, according to new data released on Tuesday by the Office for Statistics Labor (BLS).

The producer price index (PPI) rose 0.5% in April, at an annual rate of 2.2%, well above the estimates that the index would increase by 0.3% during the month, seconds in the BLS. The report adds to fears that inflation will once again be growing up after the consumer price index jumped to 3.5% in March, up from 3.2% in February and far short of the Federal Reserve's 2% target.

Growth in the price of demand services led the increase, rising 0.6% for the month, while the price of final demand goods rose 0.4%, according to the BLS. The core PPI, which excludes volatile food and energy categories, also saw its biggest increase since April 2023, rising 0.4% for the month and 3.4% for the year.

Higher inflation could further push back the possibility of a rate cut by the Federal Reserve, with most market watchers not predicting a cut until the Fed's September meeting. seconds in CME Group's FedWatch tool. The Fed has set its federal funds rate at a range of 5.25% and 5.50%, the highest level in 23 years, in response to persistently high inflation.

August has arrived early in DC today: Producer price inflation is hot and sticky with PPI up 0.5% M/M in April and 2.2% Y/Y; this is the fastest annual increase since April 23…
… inflation is NOT dead; getting worse: pic.twitter.com/QXsIjmWfNO

—EX Antoni, Ph.D. (@RealEJAntoni) May 14, 2024

About 80% of American voters listed inflation as one of the top three financial stressors in a recent survey by the Financial Times and the University of Michigan's Ross School of Business, meaning persistent inflation could seriously hurt President Joe Biden's re-election chances . Nearly half of voters polled believed Biden's policies had hurt the economy.

Economic growth slowed in the first quarter of 2024 not more 1.6% Slow growth coupled with high inflation has raised fears that the economy is entering a period of stagflation similar to the one that wreaked havoc on American consumers in the 1970s and 1980s.

Biden has tried guilt recent elevated inflation to corporate greed, claiming that companies are capitalizing on the current economy by rapidly raising prices. The Federal Reserve Bank of San Francisco recently released a report that refutes Biden's claims by showing that corporate profits in recent years have fared similarly to other periods of economic recovery when inflation was not as high.

April CPI inflation is expected to be released on Wednesday, with analysts expecting the year-on-year rate to ease slightly to 3.4%. seconds on Market Insider.

The White House did not immediately respond to a request for comment from the Daily Caller News Foundation.

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