US producer prices fall back in April, but some economists unconvinced

US wholesale prices rose by less-than-expected in April amid an unexpected drop in food prices.

According to the Bureau of Labour Statistics, the US producer price index for final demand edged higher by 0.1% month-on-month and 2.6% year-on-year.

Economists had forecast a dip in the year-on-year rate of price gains from the 3.0% observed in the month before to 2.8%.

Dragging prices lower, food costs fell by 1.1% over the month, alongside a 0.1% increase in energy prices.

Yet core final demand goods prices rose by 0.3% month-on-month, which was identical to March's gain.

Final demand services prices meanwhile were up by 0.1% on the month after an increase of 0.3% in March.

Commenting on Wednesday's data, Andrew Hunter at Capital Economics said the figures revealed more sign that US dollar weakness over the past year was feeding into core consumer goods inflation.

Combined with signals of faster wage growth in the pipeline and in anticipation of stronger gains in administered medical care prices - stoked by the higher Medicare hospital payments approved by Congress for the 2019 fiscal year - Hunter said the report reinforced his view that core PCE inflation was set to move above the US central bank's 2% target in 2018.

"And we think that will convince officials to raise interest rates three more times by year-end."