U.S. producer prices for April were much higher than expected on Wednesday, complicating the Federal Reserve’s move to ease monetary policy later this year.
The April producer price index rose 1.4% month over month, nearly triple economists’ expectations of a 0.5% increase. Annual producer inflation accelerated to 6%, while core PPI excluding food and energy climbed 1% on the month and 5.2% year on year, both well above forecasts.
The report highlights that inflation is reaccelerating after the Consumer Price Index (CPI) rose 3.8% year-on-year, the highest inflation figure in almost three years.
Bitcoin (BTC), which traded above $81,000 overnight, quickly fell below the key $80,000 level in the minutes after its release before recovering slightly. The largest cryptocurrency recently changed hands just above $80,000, down about 0.8% in the past 24 hours.
Stock futures remained relatively flat ahead of the U.S. open, with Nasdaq 100 futures up 0.2% and S&P 500 futures little changed.
The inflation surprise adds another layer of uncertainty for the Fed as policymakers deal with rising energy prices linked to the ongoing conflict in Iran and lingering concerns about supply disruptions around the Strait of Hormuz. Rising oil prices are likely to further weigh on inflation data in the coming months.
The report could also reignite debate over whether the central bank should consider additional tightening rather than cuts, even as President Donald Trump continues to pressure the Fed to lower interest rates.
This context is particularly delicate as Kevin Warsh prepares to take over as head of the central bank, with investors closely watching how the new president will balance the risks of slowing growth and resurgent inflationary pressures.
