U.S. Producer Prices Unexpectedly Decrease In April

(RTTNews) - Producer prices in the U.S. unexpectedly decreased in the month of April, according to a report released by the Labor Department on Thursday.

The Labor Department said its producer price index for final demand fell by 0.5 percent in April following a revised unchanged reading in March.

Economists had expected producer prices to rise by 0.2 percent compared to the 0.4 percent decline originally reported for the previous month.

The report also said the annual rate of producer price growth slowed to 2.4 percent in April from an upwardly revised 3.4 percent in March.

The annual rate of producer price growth was expected to dip to 2.5 percent from the 2.7 percent originally reported for the previous month.

The monthly decrease by producer prices largely reflected a pullback by prices for services, which slid by 0.7 percent in April after rising by 0.4 percent in March.

Price for trade services slumped by 1.6 percent during the month, while prices for transportation and warehousing and other services fell by 0.4 percent and 0.3 percent, respectively.

"The drop in trade services, which measure changes in margins received by sellers, hints that wholesalers and retailers could be feeling the initial pinch from tariffs on their margins," said Matthew Martin, Senior U.S. Economist at Oxford Economics.

Meanwhile, the Labor Department said prices for goods came in unchanged in April following a 0.9 percent decrease in March.

Prices for general purpose machinery and equipment jumped 1.1 percent, while prices for residential electric power, fresh and dry vegetables, non-electronic cigarettes and utility natural gas also increased.

Conversely, prices for chicken eggs plummeted by 39.4 percent and prices for gasoline, gas fuels, diesel fuel, and primary basic organic chemicals also fell.

The report also said core producer prices, which exclude prices for food, energy and trade services, edged down by 0.1 percent in April after rising by 0.2 percent in March.

The annual rate of growth by core producer prices slowed to 2.9 percent in April from 3.5 percent in the previous month.

The Labor Department released a separate report on Tuesday showing consumer prices in the U.S. rose by slightly less than expected in the month of April.

The report said the consumer price index inched up by 0.2 percent in April after edging down by 0.1 percent in March. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices also rose by 0.2 percent in April after creeping up by 0.1 percent in March. Core consumer prices were also expected to climb by 0.3 percent.

The Labor Department also said the annual rate of growth by consumer prices slowed to 2.3 percent in April from 2.4 percent in March, while the annual rate of growth by core consumer prices was unchanged at 2.8 percent.