US PPI weaker than expected in April

Producer prices were weaker than expected in April. Headline PPI fell 0.4% m/m, significantly below consensus (0.1%) forecasts. Core PPI (ex-food and energy) fell 0.2% m/m, also weaker than expected (consensus: 0.1%). On a y/y basis, headline PPI fell 1.3% (from -0.8%), while core PPI inflation rose 0.8% (from 0.9%). 

The BLS commented that declining imported inflation is passing through to domestic food prices and may be behind the sustained decline of recent months. Services inflation was down 0.1%. Headline personal consumption PPI fell 0.3% m/m, while the core measure fell a more modest 0.1%. On a y/y basis, personal consumption PPI declined 0.8%.

This report showed broad-based softness in prices across categories, with food and energy the main drivers of the decline, but the core components were down as well. PPI has declined in five of the past six months, suggesting that pipeline inflation pressures remain subdued. 

"Although we do not expect the negative contribution from the energy component to be repeated in the coming months, we think that the stronger dollar and falling imported inflation are likely to weigh on PPI in the near term." notes Barclays Capital