US producer prices in April rose at the fastest pace in four years as broad-based increases in services and goods signaled intensifying inflation pressures.
The producer price index increased 1.4% on the month, the biggest gain since March 2022, after a 0.7% rise in March, Bureau of Labor Statistics data showed Wednesday. The advance was almost triple the 0.5% increase economists expected in a survey compiled by Bloomberg.
Wholesale prices rose 6% from a year earlier, the largest annual increase since December 2022. Analysts expected a gain of 4.8% after an upwardly revised 4.3% rise in March.
Almost 60% of April's gain came from a 1.2% jump in services prices, also the fastest since March 2022, driven by higher margins for machinery and equipment wholesalers. Goods prices rose 2%, led by a 7.8% surge in energy.
"On the heels of yesterday's disappointing (consumer price index) results, the April producer price report flags intense inflation pressure in the pipeline," Sal Guatieri, senior economist at BMO Capital Markets, said in a report. "The price increases were spread wide and far."
Official data released Tuesday showed US annual consumer inflation accelerated in April to the fastest pace in almost three years as energy prices surged amid the near-complete closure of the Strait of Hormuz.
West Texas Intermediate crude has soared more than 50% as the strait, the world's most important chokepoint for oil flows, remains largely shut since the US and Israel started a war with Iran at the end of February.
The spike in producer services prices reinforced the sticky services inflation highlighted in Tuesday's CPI report, while higher core goods prices reflected lingering tariff-related pressures, Guatieri said.
"Look for another heated consumer inflation report in May, and not solely due to costlier gasoline, as price pressures stemming from the Iran war are bleeding into other sectors of the economy," he said.
Some economists say the CPI report likely keeps the Federal Reserve in wait-and-see mode. The central bank last month held rates steady for a third straight meeting and is widely expected to do so again in June, according to the CME FedWatch tool.
"Shifting to a neutral policy bias might not be the only consideration of the (Federal Open Market Committee) and incoming Chair (Kevin) Warsh at future policy meetings if longer-run inflation expectations also start to warm up," Guatieri said.
