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WASHINGTON - U.S. producer prices rebounded more than expected in April amid rising costs for
goods and services, leading to the biggest annual gain in five
years in a sign that inflation pressures were rising.
The Labor Department said on Thursday its producer price index for final demand increased 0.5 percent last month after slipping 0.1 percent in March. The PPI increased 2.5 percent in the 12 months through April, the biggest gain since February
2012, after advancing 2.3 percent in March.
Economists polled by Reuters had forecast the PPI rising 0.2 percent and gaining 2.2 percent from a year ago.
Producer prices are firming as the drag from a strong dollar and lower oil prices fades. Firming inflation, combined with a tightening labor market could keep the Federal Reserve on track to raise interest rates next month.
The U.S. central bank lifted its short-term interest rate by a quarter of a percentage point in March and has forecast two more hikes this year.
Prices for final demand services rose 0.4 percent in April, accounting for almost two-thirds of the increase in the PPI last month. They had dipped 0.1 percent in March.
The rise in the cost of services last month was driven by a 6.6 percent surge in prices for securities brokerage, dealing, investment advice and related services.
Prices for goods increased 0.5 percent after dipping 0.1 percent in March. Energy prices rose 0.8 percent, with the cost of gasoline jumping 3.9 percent. Energy prices declined 2.9 percent in March.
Food prices increased 0.9 percent after a similar increase in March. A key gauge of underlying producer price pressures that excludes food, energy and trade services surged a record 0.7 percent in April. The so-called core PPI edged up 0.1 percent in March.
The core PPI increased a record 2.1 percent in the 12 months through April, after advancing 1.7 percent in March.
The cost of healthcare services were unchanged after nudging up 0.1 percent in March. Inpatient healthcare services fell 0.2 percent last month. That followed a 0.2
percent gain in March.
The cost of outpatient care increased 0.6 percent, while physician care edged up 0.1 percent. Those costs feed into the Fed's preferred inflation measure, the core personal consumption expenditures price index.
Reporting By Lucia Mutikani; Editing by Andrea Ricci