In April, U.S. producer prices rose by 11% as food costs rose

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In April, U.S. producer prices rose by 11% as food costs rose

Rents rose faster as many apartment buildings have lifted monthly payments for new tenants. Prices for airline tickets jumped by the most on records dating to 1963. And food prices continued to rise sharply.  The Federal Reserve has stepped up its fight against rampant price increases, lifting its benchmark short-term interest rate by a half-point last week to a range of 0.75 per cent and one per cent. That increase is double its usual quarter-point hike. Fed Chair Jerome Powell also signalled the Fed will likely hike rates by a half-point in June and July. Several Fed officials have said they would like to get its benchmark rate to roughly 2.5 per cent by the end of this year, which would constitute the fastest pace of hikes in 33 years.The prospect of higher interest rates and the potential that they could push the  economy into recession has badly rattled financial markets this month.

Story Highlights

  • Yet prices are still rising at a historically rapid clip. Food costs rose 1.5 per cent just in April from March, while shipping and warehousing prices leapt 3.6 per cent. New car prices rose 0.8 per cent. The producer price data captures inflation at an earlier stage of production and can sometimes signal where consumer prices are headed. It also feeds into the Federal Reserve’s preferred measure of inflation, the personal consumption expenditures price index. Thursday’s figures came just a day after the government released consumer price data for April, which showed that inflation leapt 8.3 per cent last month from a year ago. That increase is down slightly from the four-decade high in March of 8.5 per cent. On a monthly basis, inflation rose 0.3 per cent in April from March, the smallest increase in eight months. Still, there were plenty of signs in the consumer price report that inflation will remain stubbornly high, likely for the rest of this year and into 2023.