After yesterday’s report showing an historic drop in consumer prices, the Labor Department released a report on Wednesday showing U.S. producer prices plunged by much more than expected in the month of April.
The Labor Department said its producer price index for final demand tumbled by 1.3 percent in April after edging down by 0.2 percent in March. Economists had expected prices to drop by 0.5 percent.
The steep drop by the producer price index for final demand reflected the largest decrease since the index began in December 2009.
The bigger than expected decrease in producer prices came as energy prices nosedived by 19.0 in April after plummeting by 6.7 percent in March.
Food prices also decreased during the month, falling by 0.5 percent in April after coming in unchanged in the previous month.
Excluding food and energy prices, core producer prices fell by 0.3 percent in April after inching up by 0.2 percent in March. Core prices were expected to be unchanged.
The drop in core prices came as prices for goods excluding food and energy slid by 0.4 percent, while prices for services dipped by 0.2 percent.
Prices for transportation and warehousing services plunged by 3.5 percent and prices for services less trade, transportation, and warehousing slumped by 0.9 percent.
On the other hand, the report said prices for trade services spiked by 1.6 percent in April after surging up by 1.4 percent in March.
Andrew Hunter, Senior U.S. Economist at Capital Economics, said the jump in prices for trade services most likely reflects continued supply chain disruptions and highlights that the impact of the coronavirus pandemic is not entirely deflationary.
Excluding prices for food, energy and trade services, producer prices tumbled by 0.9 percent in April after dipping by 0.2 percent in March.
Compared to the same month a year ago, producer prices in April were down by 1.2 percent, reflecting a notable downturn from the 0.7 percent increase seen in March.
Producer prices less food, energy and trade were down by 0.3 percent year-over-year in April compared to the 1.0 percent increase in March.
On Tuesday, the Labor Department released a separate report showing consumer prices in the U.S. decreased in line with economist estimates in the month of April.
The Labor Department said its consumer price index slid by 0.8 percent in April after falling by 0.4 percent in March.
The drop by the index, which matched economist estimates, reflects the largest monthly decline since December of 2008.
Excluding food and energy prices, core consumer prices fell by 0.4 percent in April after edging down by 0.1 percent in March. Economists had expected core prices to dip by 0.2 percent.
The drop in core prices was the biggest on record dating back to 1957 and reflected sharply lower prices for apparel, motor vehicle insurance, airline fares, and lodging away from home.
Compared to the same month a year ago, consumer prices in April were up by just 0.3 percent, reflecting the slowest annual growth since October of 2015.
The annual rate of growth in core consumer prices also slowed to 1.4 percent in April from 2.1 percent in March, showing the smallest increase since April of 2011.