Supply-chain inflation rose less than economists expected during the first month of the Iran war, but leaped 6% over the year in April — hotter than forecast and marking the largest annual increase since December 2022.

Wholesale prices rose 4.3% in March and 3.4% in February, according to U.S. Bureau of Labor Statistics (BLS), which updated the producer price index (PPI) with April data on Wednesday. Economists polled by Reuters had forecast 4.9% annual growth in the PPI in April.

The PPI tracks inflation across the U.S. supply chain, offering forward-looking signals on upcoming price changes in the consumer price index (CPI), which rose 3.8% in April, also on growing impacts of the Middle East conflict. April marked the largest annual gain since May 2023 in the CPI.

On a seasonally adjusted monthly basis, PPI inflation increased 1.4% in April, double the 0.7% pace in March, which was only slightly higher than 0.6% growth in February and January. Economists surveyed by The Wall Street Journal had expected a 0.5% monthly rise in PPI inflation, compared to the 1.4% recorded.

April’s monthly spike in the PPI was the largest since March 2022, the month following Russia’s invasion of Ukraine.

Meanwhile, so-called “core” PPI inflation, which strips out volatile food, energy and margin pricing, increased 4.4% over the year in April and 0.6% from March, when core PPI rose 3.7% and 0.2%, respectively. Core PPI was 3.6% and 3.5% on an annual basis in February and January.

Wholesale goods prices rose 2% monthly in April after rising 1.9% in March and 1% in February, before the onset of the ongoing war in Iran, now in its third month. Pass-through impacts of President Donald Trump’s signature tariff policies were already exerting upward pressure on wholesale goods prices before the start of the war on Feb. 28.

Spiking energy costs amid an ongoing global supply crunch, trade disruptions and shortages of key industrial inputs like aluminum, fertilizer and helium are now raising costs for suppliers and producers, compounding inflationary effects. Economists warn that the myriad economic costs of the war will intensify the longer the conflict lasts.

BLS attributed “more than three-quarters” of the April rise in wholesale goods prices to a 7.8% spike in the component energy index. More specifically, “over 40% of the April advance in prices for final demand goods can be attributed to a 15.6% increase in the index for gasoline,” said Wednesday’s report. Prices for jet fuel, diesel, residual fuels, industrial chemicals and fresh and dry vegetables were all flagged as rising.

Wholesale services prices, however, drove much of April’s increase in the PPI, posting its fastest rise since March 2022. Wholesale services prices spiked 1.2% last month compared to 0.2% growth in March. Two-thirds of that jump reflects a 2.7% expansion in margins between wholesalers and retailers, which had increased just 0.3% over the previous month and had declined by 0.1% in February.

Drilling down, BLS flagged a 3.5% increase in margins for machinery and equipment wholesaling. The component index tracking transportation and warehousing services rose 5% in April compared to a 1.8% increase in March and 0.8% growth in February.