U.S. PPI continues to rise strongly in April Inflationary pressure further increased

The U.S. Producer Price Index (PPI) continued to rise sharply in April, and the monthly and annual rates of increase in final demand, kernel and overall PPI exceeded forecasts, showing that the recovery in the economy and the “low base period effect” on the impact of prices further demonstrated; and because of the increased pressure on manufacturers to raise production costs, hurting corporate profits, and may pull up Consumer prices (CPI) accelerated higher.

April final demand PPI (i.e. overall PPI) rose by 0.6% compared to March, although the rate of increase was lower than the 1% in March, but still higher than the market expectation of 0.3% increase, showing that international raw material prices and supply chain disruptions have led to higher costs for manufacturers, thus raising the ex-factory price of products.

Last month, the annual rate of increase in PPI reached 6.2%, higher than the expected 4.2%, much higher than the 4.2% in March, which not only reflects the higher costs of manufacturers, but also by the impact of the new crown pneumonia (CCP virus) epidemic since March last year, resulting in lower prices, so that the comparative base period is low.

The kernel PPI, net of energy and food, rose 0.7% in April compared to March, higher than the expected 0.4% increase, and the same as the 0.7% increase in March; it rose 4.1% over the same period last year, exceeding the 3.1% increase in March, and higher than the estimated 3.8%.

After deducting energy, food and trade items, the PPI for April rose 0.7% from March, much higher than the expected 0.4%, and further higher than the 0.6% increase in March; it rose 4.6% from a year ago, higher than the 3.1% increase in March and higher than the 4.3% estimated by economists.

Economists pointed out that not only the cost of raw materials has increased, wages have also accelerated, posing a threat to corporate profits, which may force companies to raise the selling price of their products, thus pushing up consumer prices soaring, and also bringing a test of the Federal Reserve’s ultra-loose policy.