U.S. Producer Prices Jump 0.5% in April

A gauge of U.S. business prices rose more than expected in April, suggesting that price pressures have firmed after a short lull.

The producer-price index for final demand, measuring changes in the prices that U.S. companies receive for their goods and services, increased a seasonally adjusted 0.5% in April from the prior month, the Labor Department said Thursday.

Economists surveyed by The Wall Street Journal had expected a 0.2% rise.

Prices for final demand services grew 0.4% in April, accounting for nearly two-thirds of the advance in the final demand index. Much of the increase stems from rising prices for services at securities brokerages.

From a year earlier, overall prices advanced 2.5%, the largest increase since February 2012.

Excluding often-volatile prices for food and energy, the index grew 0.4% in April from the prior month. Economists had expected a 0.2% gain. From a year earlier, those core prices were up 1.9%.

PPI is an inflation gauge that looks at prices businesses receive from customers, including consumers, other businesses and governments. As a result, changes in the index don't necessarily directly reflect what consumers pay. But PPI readings generally follow the same trends as other major inflation gauges.

The personal-consumption expenditures price index, which is the Federal Reserve's preferred inflation gauge, advanced 1.8% year over year in March. The Fed's target is 2% inflation.

The Fed is expected to raise interest rates two more times this year, in part because inflation has firmed.

The Labor Department's producer-price index report can be accessed at: http://www.bls.gov/news.release/ppi.nr0.htm

Write to Sarah Chaney at sarah.chaney@wsj.com and Jeffrey Sparshott at jeffrey.sparshott@wsj.com.

(END) Dow Jones Newswires

May 11, 2017 08:45 ET (12:45 GMT)