Published: Thu, May 10, 2018
Finance | By Claude Patterson

United States wholesale prices up slightly, food costs down

United States wholesale prices up slightly, food costs down

USA consumer inflation rose by less than estimated in April as costs for automobiles and airfares declined, reducing chances that inflation will overshoot the Federal Reserve's target in coming months.

The producer-price index, a measure of prices charged by business for their goods and services, rose a seasonally adjusted 0.1 percent in April, the Labor Department said on Wednesday.

That lowered the year-on-year increase in the PPI to 2.6 percent from 3 per cent in March.

Excluding the volatile food and energy categories, producer prices advanced 0.2% in April, matching economists' expectations.

This comes as last year's big declines in prices of cell phone service plans drop out of the calculation. The report suggests inflation isn't flaring up in a way that would be troublesome for policy makers, despite higher freight costs, a tight labor market and tariffs that are burdening businesses.

Many analysts believe the Fed will raise rates for a second time this year when officials next meet in June and could end up boosting rates a total of three or perhaps four times this year.

On an unadjusted basis, the final demand index increased 2.6 percent for the 12 months ended in April.

Producer energy prices rose 0.1% in April from March.

The shelter category rose 0.3% from the prior month after a 0.4% gain.

Costs for new vehicles fell 0.5 percent after being unchanged the prior month; used-vehicle prices dropped 1.6 percent, the most since March 2009, following a 0.3 percent decline.

Airfares fell 2.7%, most since January 2014. The advance in April was led by the index for final demand trade services, which increased 0.2 percent.

Expenses for medical care rose 0.1%. They note that the Trump administration's announcement this week that it was re-imposing sanctions on Iran could cause a spike in global oil prices at a time when low US unemployment could trigger rising wage pressures.

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