Wholesale prices in April rose at their fastest rate in four years, the latest sign that the war with Iran is taking a toll on the U.S. economy.
The Producer Price Index, a measure of the costs that businesses pay for goods and services, rose 1.4 percent in April and was up 6 percent from a year earlier, the Bureau of Labor Statistics said Wednesday. It was the fastest one-month increase in the index since March 2022.
The news came one day after the government reported that the better-known Consumer Price Index rose 3.8 percent in April from a year earlier, the fastest pace of inflation in nearly three years.
The producer index typically gets less attention than the consumer index, which measures the prices paid by everyday shoppers. But economists watch the measure closely, especially during periods of global disruption, because it gives an early look at how costs are filtering through the supply chain.
The U.S.-Israeli war with Iran, which began in late February, has driven up energy prices around the world. That, in turn, has pushed up costs for manufacturers, which rely on oil and natural gas to fuel their plants and as a raw material for many of their products. And it has raised the cost of shipping those products by land, sea and air.
Still, the ripple effects of the war on the U.S. economy initially appeared relatively modest. The Bureau of Labor Statistics initially reported that producer prices rose just 0.5 percent in March, which economists took as an encouraging sign that the energy price shock was not setting off a broader inflationary spiral similar to the one seen during the coronavirus pandemic.
The data released on Tuesday, however, calls that optimism into question. The increase in March was revised up slightly, to 0.7 percent. And April’s gain was nearly triple what forecasters had expected.
Energy prices paid by producers jumped 7.8 percent in April after rising 10.1 percent in March. And the price increases weren’t limited to energy. “Core” producer prices, which exclude energy and other volatile categories, rose 0.6 percent from March and were up 4.4 percent from a year earlier. That suggests that the oil-price shock, as well as the lingering effects of President Trump’s tariffs, are working their way through the supply chain.
“These numbers show ample evidence of both tariff-related pass-through and the energy price shock rippling widely through the economy, suggesting that consumer price inflation may get significantly firmer in the months to come,” Stephen Stanley, chief U.S. economist at Santander, wrote in a note to clients.
Ben Casselman is the chief economics correspondent for The Times. He has reported on the economy for nearly 20 years.
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