U.S. April producer prices decline for 3rd time this year
U.S. producer prices resumed their downward trend in April as the cost of energy fell and a strong dollar kept underlying inflation pressures benign, supporting views that the Federal Reserve will only raise interest rates later in the year.
The Labor Department said on Thursday its producer price index for final demand fell 0.4 percent last month, declining for the third time this year. The PPI increased 0.2 percent in March.
In the 12 months through April, producer prices fell 1.3 percent, the biggest year-on-year decline since 2010, after declining 0.8 percent in March.
Economists had forecast the PPI rising 0.2 percent last month and falling 0.8 percent from a year ago.
A drop of 0.7 percent in the index for final demand goods accounted for more than 70 percent of the decline in the PPI last month. Energy prices fell 2.9 percent after rising 1.5 percent in March. Food prices fell for a fifth straight month.
The dollar, which has gained about 11 percent against the currencies of the United States’ main trading partners since June, and lower energy prices are keeping inflation subdued.
That, together with signs of a modest rebound in economic growth after a dismal first quarter, suggest the Fed should be in no rush to start tightening monetary policy. Most economists do not expect the U.S. central bank to hike rates before September.
