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Producer Price Index Rises Again, Signaling Continued Inflation Trends

The monthly report attributes a large portion of its increase to a rise in natural gas costs, which surged more than 16% for the month

Wholesale inflation reached 11% in April from a year earlier, indicating that record inflation will continue to impact consumers and businesses in the months ahead.

On Thursday, the U.S. Bureau of Labor and Statistics released its monthly producer price index report (PPI), which measures inflation before reaching consumers. The report indicated that wholesale prices had climbed 0.5% in April from March. However, it is a somewhat slower pace from the previous month, when it jumped 1.6%.

The PPI increase of 11% is not reflective of total wholesale costs, as food and energy costs are considered separately. The total change in cost of goods, unadjusted and including food and energy increases has reached 48.1% in the last year.

The adjusted 11% cost of goods increase in April is a minimal decline from March’s 11.5% gain. The March numbers showed the most significant increase since records began in 2010.

The report noted that more than half “of the April increase in the index for unprocessed goods for intermediate demand is attributable to a 16.9% jump in natural gas prices.”

The report also said that “crude petroleum, ungraded chicken eggs, coal, grains, and raw cotton” had increased in price as well during the last month. 

The monthly report showed that processed food costs had risen by 2.9%, while unprocessed food costs had risen by 2.5%. The aggregate price of wholesale foods has increased by 2.7% for the month, a cost that directly impacts consumers nationwide. 

The single largest sector of unprocessed goods was related to energy, meaning unrefined oils and natural gas, which saw a 10.3% increase for the month. 

Commercial real estate lease prices rose by 4.3% for the month, a direct impact on the operational cost of most businesses.

Other areas that reflected an increase for the month include freight management, truck transportation of freight, and mail delivery costs. 

Diesel fuel, jet fuel, petroleum, coal, and natural gas all experienced an increase for the month, while reported demand for the products increased by 16.8%. The report noted that gasoline costs had fallen 6.3%, data not inclusive of the latest price surge impacting consumers.

Lumber, plastics, carbon raw steel, industrial chemicals, and other construction materials saw an average of 4.9% increase, with demand increasing more than 23% for the month.

Thursday’s wholesale numbers came just a day after the government released consumer price data for April, which showed that inflation had increased by 8.3% that month.

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