WASHINGTON, July 14 – U.S. producer prices rose more than expected in June on rising energy product costs, but core producer inflation appeared to have peaked.
The producer price index for final demand rose 1.1% last month after rising 0.9% in May, the Labor Department said on Thursday. In the 12 months to June, PPI increased by 11.3%, following a 10.9% rise in May.
The 2.4% increase in goods prices accounted for three-quarters of the increase in PPI. Goods prices rose by 0.4% in May. Almost 90% of last month’s rise in commodity prices was attributed to a 10.0% jump in energy prices. The prices of gasoline, diesel, electricity, and natural gas rose significantly. Wholesale food prices rose slightly by 0.1%.
Service costs rose 0.4% after climbing 0.6% in May.
Economists polled had forecast a 0.8% year-on-year rise in PPI and a 10.7% increase.
The government on Wednesday reported an acceleration in consumer prices in June, with the annual rate notching the biggest increase since late 1981. Inflation is surging, fueled by snarling global supply chains and massive fiscal stimulus from governments at the start of the COVID-19 pandemic.
The situation was exacerbated by Russia’s protracted war against Ukraine, which caused a sharp rise in global food and fuel prices. But there are some glimmers of hope that price pressures could be nearing a peak.
Oil prices have fallen sharply, with global benchmark Brent trading below $100 a barrel after jumping to $139 in March, which was close to an all-time high reached in 2008. Prices for other commodities are also coming to a boil.
Excluding the volatile components of food, energy, and business services, producer prices rose 0.3% in June. The so-called core PPI increased by 0.4% in May. In the 12 months to June, the core PPI rose 6.4% after rising 6.7% in May.
The Federal Reserve is expected to raise its key interest rate by another 75 basis points later this month as it battles to cool demand and reduce inflation to its 2% target. The US central bank has increased the overnight interest rate by 150 basis points since March.