U.S. producer prices posted their biggest increase in four years in April, boosted by soaring costs for goods and services, the latest sign of accelerating inflation amid the war with Iran.
The PPI inflation accelerated to +6.0%yoy in Apr-26 (Mar-26: +4.3%yoy), surpassing market consensus of +4.9%yoy and marking the highest reading since Dec-22. This was driven by rising margins in trade services, escalating warehousing and transport costs, and a volatile energy market fuelled by ongoing tensions in the Middle East.
On a monthly basis, PPI inflation surged by +1.4%mom (Mar-26: +0.7%mom) marking the steepest rise since Mar-22 and exceeding expectations of +0.5%mom. Goods prices climbed +2.0%mom, driven primarily by a +15.6%mom spike in gasoline as the ongoing conflict in Iran continued to push oil prices upward. Simultaneously, services rose +1.2%mom, recording the sharpest increase since Mar-22, driven by a +3.5%mom expansion in margins for machinery and equipment wholesaling. Core producer prices, excluding food and energy prices, increased by +5.2%yoy, (Mar-26: +4.0%yoy). On a monthly basis, core PPI surged by +1.0%mom (Mar-25: +0.2%mom), marking the highest reading since Mar-22.
The recent data provides clear evidence of tariff-related passthrough and energy shocks rippling through the economy, signalling a significant firming of consumer inflation in the coming months. Rising input costs, exacerbated by the Iran conflict and shipping disruptions in the Strait of Hormuz, suggest persistent upward pressure on prices. Coupled with April’s robust nonfarm payroll growth, these inflationary pressures support the Fed’s current pause, thus maintaining a ‘higher-for-longer’ policy stance for now.
