US wholesale prices rise more than expected in April

US wholesale prices rose continued to accelerate last month, according to fresh US government data published Tuesday, rising by more than expected on a sharp rise in the cost of services.

The rise provides yet more evidence that the US Federal Reserve's fight against inflation is far from over, and will likely lead the US central bank to keep interest rates at their current highs for longer than previously thought.

The producer price index (PPI) jumped by 0.5 percent in April, the Labor Department said in a statement, marking a sharp increase from a revised 0.1 percent slowdown a month earlier.


This was well above market expectations of a 0.3 percent monthly rise, according to Briefing.com.

Wholesale prices rose at an annual rate of 2.2 percent for the 12 months ending in April, its highest level for a year.

"PPI inflation surprised to the upside in April across measures," High Frequency Economics chief US economist Rubeela Farooqi wrote in a note to clients.

"Coupled with sticky CPI readings, the data support the Fed's view that rates will likely remain high for longer than previously expected," added Farooqi, referring to the widely-used Consumer Price Index measure of inflation.

"Nearly three-quarters of the April advance in final demand prices is attributable to a 0.6-percent increase in the index for final demand services," the Labor Department said, adding that the index for portfolio management was a "major" reason for the increase in final demand services.

Wholesale goods prices, which contracted in March, also rose sharply on the back of an increase in energy costs.