Some more eye-opening, mkt killing news
Continues to confirm what I've been seeing with supplier price increases. Govt #'s are lagging though-maybe intentionally to lessen the shock. The worst has yet to be reported and will probably really start to show in CPI 3-6 months out.
By Joseph Rebello and Paulette Chu
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--U.S. wholesale prices rose in April at a faster pace than Wall Street expected amid a surge in prices of tobacco and prescription drugs, indicating inflation continues to build in the production pipeline.
The producer price index for finished goods rose 0.6%, only slightly less than the 0.7% increase recorded in March, the Labor Department said Tuesday. That slowdown reflected a moderation in the growth of energy prices. The core index, which excludes food and energy items, rose 0.3% - the largest increase in three months.
Wall Street expected much smaller increases. The average forecast of economists surveyed by Dow Jones Newswires and CNBC had called for a 0.4% increase in the overall index and a 0.2% gain in core prices.
Most inflation gauges recently have shown prices rising at an unexpectedly fast pace. But Fed policy makers have said they expect inflation to remain "contained" so long as they stick to their strategy of increasing interest rates in increments of a quarter percentage point every six to eight weeks.
The U.S. central bank has made eight such increases in its key federal funds rate since June 2004, raising it to 3%. Wall Street widely expects the Fed's Open Market Committee to raise the rate a quarter point at each of its next two meetings. That would put the rate at 3.5% by mid-August.
The Labor Department's report Tuesday showed that energy prices rose for a third consecutive month despite a drop in prices of crude oil. Oil prices hit a record of about $58 a barrel in early April but dropped by about $8 by the end of the month.
Overall energy prices increased 2.1% in April after a 3.3% gain in March. That partly reflected a 6.6% gain in prices of residential natural gas - the largest increase in two years. Gasoline prices rose 2.6%.
The growth of food prices moderated - the increase in April was 0.1%, down from a 0.3% gain in March. But prices of tobacco rose 1%, ten times the rate in March. Prices of pharmaceutical prescriptions rose 0.9%, the biggest increase since April 2004. Prices of passenger cars rose 0.5%, the biggest increase in three months.
Inflation pressures eased farther up the production pipeline. Prices of crude goods grew more slowly, climbing at a 2.7% rate after 4.3% increase in March. Prices of intermediate - or semi-processed - goods grew at a 0.8% rate after a 1% gain in March.
-By Joseph Rebello and Paulette Chu; 202-862-9279; joseph.rebello@dowjones.com
(END) Dow Jones Newswires
May 17, 2005 08:30 ET (12:30 GMT)- - 08 30 AM EDT 05-17-05 |
