Wholesale prices dropped in April due to lower oil and gas prices and the stronger dollar.
The Labor Dept. Thursday said that its producer price index for final demand fell a seasonally adjusted 0.4% in April, after moving up 0.2% in March. In addition, on an unadjusted basis, the index for final demand declined 1.3% for the 12 months ended in April. (The producer-price index for final demand measures prices that businesses receive for their goods and services.)
Leading the broad-based decline, prices for energy fell 2.9%. More than 30% of the April decline in prices for final demand goods can be attributed to the index for gasoline, which decreased 4.7%. Prices for diesel fuel, jet fuel, utility natural gas, pork, and industrial chemicals also moved lower. In contrast, the index for pharmaceutical preparations rose 0.5%. Prices for fresh and dry vegetables and for raw cotton also moved up, the Labor Department said.
Margins for trade services fell 0.8%, and the index for transportation and warehousing services declined 0.1%.
More than 40% of the April decrease in the index for final demand services can be traced to margins for machinery and equipment wholesaling, which declined 1%. The indexes for automotive fuels and lubricants retailing; health, beauty, and optical goods retailing; portfolio management; and food and alcohol retailing also moved lower. In contrast, prices for securities brokerage, investment advice, and related services rose 4%.
The indexes for food wholesaling, inpatient care, and passenger car rental also advanced.
Wholesale prices have been muted this year due to “a plunge in energy prices in the second half of 2014 and a stronger dollar boosted by subdued growth abroad,” according to Bloomberg. Federal Reserve officials are watching for signs of inflation as they consider raising rates for the first time in nine years.
“Inflation is still very tame,” High Frequency Economics chief U.S. economist Jim O’Sullivan told Bloomberg. “If anything, it’s a little weaker.”
The median estimate in a Bloomberg survey of 74 economists called for a 0.1% increase in the producer price index. Projections ranged from a drop of 0.2% to a 0.4% rise.