However, the core rate, which excludes food and energy costs, increased 0.4% -- a pace well above consensus expectations. Economists surveyed by Bloomberg News had expected the April 2008 PPI index and core rate to increase by 0.4% and 0.2% respectively.
So far in 2008, producer prices are increasing at an alarming annual rate, 8.5%, compared to 8.4% for the same period a year ago. The core rate is increasing at a 5.2% annual pace, compared to 2.1% for a year ago.
12-month PPI accelerates
For the past 12 months, producer prices have increased 6.5%, and the core rate has risen 3.0%. The core rate's advance is the largest year-over-year core rate increase since 1991.
Also, the core intermediate PPI -- a benchmark, leading indicator of inflation and one the U.S. Federal Reserve monitors closely -- increased 1.2% in April 2008 and has increased 5.8% in the past year, its biggest increase in about two years.
In April 2008, raw material prices increased 3.2%, crude energy jumped 4.1%, petroleum prices gained 4.5%, and natural gas climbed 4.3%. Also, furniture prices increased 1.8%, drug prices rose 1%, light trucks increased 1.2%, and car prices gained 0.4%. Food prices were flat.
Economic Analysis: A somewhat deceptive April 2008 PPI report. The overall statistic was low, registering a 0.2% gain. However, the overall rate masks two troubling statistics: the large 0.4% gain in the core rate and the 5.8% yearly increase in the core intermediate PPI. Given that the U.S. Federal Reserve monitors the core rate and core intermediate PPI, the large gains in those indicators are likely to strengthen the Fed hawks' argument that inflation in the producer pipeline is rising, and that the Fed should pause its interest rate reduction cycle and redouble its efforts regarding price stability.
Closing Bell: What sell-off? (AIG, ABK, EPR, MBI, JAVA, ORCL, ERTS)
Chasing Value: 2009 blazing picks -- Q3 review 
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