The Labor Department Tuesday morning reported its Producer Price Index for finished goods rose a relatively modest 0.2% in April on a seasonally adjusted basis, but it also said the core index, minus food and energy, rose at twice that rate--0.4%--twice what analysts were expecting.
It was a drop of 0.2% in the prices of energy related goods that kept the overall index in check, the Labor Department said. The recent run-up in prices of gasoline and diesel, along with electricity rate increases, are bound to drive the number up further in coming months.
The overall 0.2% increase followed a 1.1% advance in March and a 0.3% increase in February. At the earlier stages of processing, prices received by producers of intermediate goods rose 0.9% following a 2.3% gain a month earlier, and the crude goods index advanced 3.2% after climbing 8.0% in March.
Before seasonal adjustment, the PPI for finished goods increased 0.7% in April from March and 6.5% from the same month last year. On a year-over-year basis, the finished energy goods index advanced 17.5%, prices for finished goods less foods and energy increased 3.0%, and the index for finished consumer foods climbed 5.2%. For the 12 months ended April 2008, prices received by manufacturers of intermediate goods advanced 10.5%, and the crude goods index jumped 34.3%.
The numbers sent Wall Street into a swoon in early trading, with the Dow off more than 150 points by 10 a.m. Builder stocks were down across the board, with the S&P exchange traded home building fund (AMEX:XHB) off 3.2% at $21.06.