U.S. factory gate prices slumped 0.5% in April

Investing.com - U.S. factory gate prices slumped on a monthly basis in April, in the latest sign of cooling inflationary pressures in the world’s largest economy.

The producer price index for final demand grew 2.4% annually last month, after having risen a revised 3.4% in March, according to Labor Department data. Economists had called for 2.5% growth.

On a monthly basis, the PPI figure fell 0.5% in April, the first monthly fall since 2023, after the previous month’s figure was revised to flat from a fall of 0.4%.

Taking out more volatile items like fuel and food, so-called “core” PPI fell 0.4% on a monthly basis, from a revised rise of 0.4% in March, and an annualized pace of 3.1%, from a revised 4.0%. The March annual figure had previously been reported at 3.3%.

Data released earlier this week showed that the more widely-watched consumer price index grew by 2.3% in the 12 months to April, compared with expectations that it would match March’s pace of 2.4%.

It was the lowest annual rate of inflation since February 2021, shortly before pent-up pandemic-fueled demand and supply constraints led to soaring prices.

The Federal Reserve has held short-term borrowing costs in the 4.25%-4.50% range at each of its three meetings so far this year, and last week Fed Chair Jerome Powell signaled there is no rush to change that.

The Trump administration has driven import levies to record levels only to postpone or suspend the most aggressive actions, while exempting some goods from these tariffs.

The back and forth has left the Fed struggling to determine the ultimate impact on inflation, growth and employment.

As it stands, the U.S. central bank is currently expected to cut next in September, delivering the first of a couple of rate cuts by year’s end.

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