You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to www.journalgazette.net/newsletter and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.

Business

  • Zimmer's quarterly earnings up 16%
    Zimmer Holdings Inc. today reported second-quarter earnings of $176.5 million, or $1.03 per diluted common share, on net sales of $1.18 billion. That's a 16 percent increase from the $152.1 million, or 89 cents a share, on sales of $1.17 billion
  • GM quarterly profit falls 85% on recall costs
    DETROIT – Recall expenses chopped $1.5 billion from General Motors’ bottom line in the second quarter, as it added up the costs of repairs for nearly 30 million cars and set aside funds to compensate victims of small-car crashes.
  • China detains employees of suspect meat seller
    Five employees of a company accused of selling expired beef and chicken to McDonald’s, KFC and other restaurants in China were detained by police Wednesday after an official said illegal activity was an organized effort by the
Advertisement
Associated Press
Anthony Zingale wires blender motors at a Vitamix plant in Strongsville, Ohio. The US producer price index rose a seasonally adjusted 0.6 percent from March to April.

Producer prices rise 0.6%, hinting inflation upsurge

– The prices that U.S. companies receive for their goods and services rose in April by the most in 19 months, a sign that inflation may be picking up from very low levels.

The producer price index rose a seasonally adjusted 0.6 percent from March to April, the Labor Department said Wednesday, after a 0.5 percent increase from February to March. April’s increases were led by higher food prices and greater profit margins for retailers and wholesalers.

Over the past 12 months, producer prices have risen 2.1 percent, the biggest 12-month gain in more than two years. That figure is roughly in line with the Federal Reserve’s 2 percent inflation target. The producer price index measures price changes before they reach consumers.

Excluding the volatile categories of food, energy, and retailer and wholesaler margins, however, the month-to-month increase in April was smaller: Core prices rose 0.3 percent from March.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, noted that the profit margins dropped sharply over the winter before increasing in the past two months, “so we can’t yet say an upward trend is emerging.”

Still, the report suggests that inflation may be picking up after coming in below 2 percent for two years. That could reflect better economic health: Higher inflation is generally a sign of rising consumer demand.

Paul Dales, an economist at Capital Economics, said a sharp gain in profit margins for machinery and equipment wholesalers drove overall margins higher. That’s a sign that companies are stepping up their purchases of large equipment after a weak first quarter, Dales said.

A key question is whether the sharp increases in producer prices of the past two months will flow into consumer prices. Wage increases have been weak, and unemployment remains high at 6.3 percent.

The squeeze for consumers means that manufacturers and retailers haven’t been able to raise prices much. But Dales forecasts that consumers will pay a bit more by 2015.

“We are expecting the stronger economic recovery and rising wage growth to push core inflation above 2 percent next year,” he said.

Food costs jumped 2.7 percent in April, the highest in more than three years, driven by an 8.4 percent increase in meat prices.

Advertisement