Compared with a year earlier, wholesale prices rose just 2.3%, the 10th straight slowdown and the lowest figure since January 2021. Lower energy prices helped slow the annual inflation rate.
Excluding volatile food and energy prices, so-called core wholesale inflation rose 0.2% from March and 3.2% from 12 months earlier. The year-over-year increase in core wholesale inflation was the lowest since March 2021 and marked the seventh straight slowdown. The Fed pays particularly close attention to core prices, which tend to be a better gauge of the economy’s underlying inflation pressures.
April’s mild producer price figures amount to “much needed and awaited good news’ for the Fed’s fight against inflation, said Ryan Sweet, chief U.S. economist at Oxford Economics. On a year-over-year basis, overall consumer inflation, at 4.9%, has dropped significantly since peaking at 9.1% in June 2022 yet remains well above the Fed’s target level. Economic growth slowed to a tepid 1.1% annual rate from January through March.
Higher borrowing costs have dealt a blow to some key sectors of the economy, notably the housing market. Pounded by higher mortgage rates, sales of existing homes were down a sharp 22% in March from a year earlier. Investment in housing has cratered over the past year.
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