Prices for goods and services produced by U.S. companies soared in April, far exceeding economists’ estimates and marking the worst monthly inflation in more than four years.

The Producer Price Index for final demand rose 1.4 percent compared with the previous month, the Bureau of Labor Statistics said Wednesday. Compared with a year ago, producer prices are up six percent, the biggest increase since December 2022.

The surge was driven by a war-fueled spike in energy prices that is beginning to ripple through broader segments of the economy, including freight transportation and manufacturing supply chains. Energy costs alone rose 7.8 percent during the month.

Economists had expected a 0.5 percent increase for the month. The 12-month rate of producer price inflation was forecast to come in at 4.8 percent. The estimate for the monthly inflation figure for March was revised up from 0.5 percent to 0.7 percent. The year-over-year increase was revised to 4.3 percent from four percent.

Core producer prices, a measure that excludes food and energy, climbed 1.0 percent in April.  Core prices are up 5.2 percent annually—the largest gain in more than three years—suggesting that energy-driven price pressures are beginning to bleed into underlying inflation beyond commodities.

Trade services, a measure of wholesale and retail margins, rose 2.7 percent for the month and they are up 8.1 percent from a year ago. Margins for consumer goods rose 2.5 percent on a monthly basis and are up 6.5 percent from a year ago. Margins for sellers of private capital equipment—a heavily AI-influenced category—jumped 3.8 percent and are up 12.3 percent from a year ago.

Excluding trade services, food, and energy—a measure sometimes called supercore producer prices—climbed 0.6 percent in April. From a year ago, supercore prices are up 4.4 percent.

The Producer Price Index measures price changes from the perspective of producers and suppliers. It differs fundamentally from the Consumer Price Index, which measures inflation from the buyer’s perspective.

Final demand prices track goods and services sold to end users—consumers, businesses making capital investments, and government—and include exports produced domestically but exclude imports. CPI includes import prices but excludes exports and government purchases.

PPI is not “wholesale prices,” a misnomer that still gets used in legacy media reports. The index has never been particularly focused on wholesale prices and has not been officially called the wholesale price index since the 1970s.

Services accounted for nearly 60 percent of the April gain, advancing 1.2 percent—the largest increase since March 2022. Transportation and warehousing services jumped 5.0 percent, driven by trucking costs that surged 8.1 percent, the largest increase in data going back to 2009. Excluding trade, transportation, and warehousing, services prices moved up just 0.1 percent, highlighting the role of energy prices in driving the increase.

Consumer services excluding trade, transportation, and warehousing were unchanged for the month, as they were in March. This suggests that the Iran war “energy tax” is sapping demand from other parts of the economy, leaving many businesses with diminished pricing power.

Goods prices moved up 2.0 percent, with energy leading the advance. Core goods, a measure that excludes food and energy products, rose 0.7 percent. Prices of core goods are up 4.6 percent from a year ago. Food prices moved up 0.2 percent for the month and 2.2 percent for the year. Prices for consumer goods rose 0.5 percent and are up 3.6 percent from a year ago.

The gains were broad across intermediate demand as well. Processed goods for intermediate demand jumped 2.7 percent, unprocessed goods surged 4.1 percent, and services advanced 1.1 percent. For the 12 months ended in April, intermediate demand prices moved up significantly across all categories, with unprocessed goods posting a particularly sharp 20.9 percent annual increase.

Intermediate goods are those purchased by businesses as inputs to production—such as steel for manufacturers, diesel fuel for trucking companies, or legal services for firms—rather than goods sold directly to consumers.

There was some good news for the U.S. economy in the report. Prices for exported energy products rose 15.8 percent in April. That followed a 17.9 percent increase in March. From a year ago, energy export prices are up 50 percent.