US producer prices rose more than expected in June amid rising energy costs, but core producer inflation appears to have peaked.
The producer price index for final demand rose 1.1% last month, after rising 0.9% in May, the Labor Department reported. In the 12 months to June, the PPI increased 11.3%, after advancing 10.9% in May.
The 2.4% rise in goods prices accounted for three quarters of the increase in the PPI.
Goods prices gained 0.4% in May. Nearly 90% of last month’s rise in property prices was attributed to a 10% jump in energy prices.
There were strong increases in the prices of gasoline, diesel, electricity and residential natural gas. Wholesale food prices rose 0.1%.
The cost of services rose 0.4%, after rising 0.6% in May.
Economists polled by Reuters had forecast the PPI to rise 0.8% and rise 10.7% year-on-year.
The government on Wednesday reported an acceleration in consumer prices in June, with the annual rate posting its biggest increase since late 1981. Inflation is skyrocketing, fueled by gridlocks in global supply chains and massive stimulus. governments’ taxpayers at the beginning of the COVID-19 pandemic.
Russia’s protracted war against Ukraine, which has caused global food and fuel prices to spike, has made the situation worse. But there are some glimmers of hope that price pressures could be peaking.
Crude prices have fallen sharply, with Brent trading below $100 a barrel, after rising as high as $139 in March, close to the all-time high reached in 2008. Other commodity prices too they are collapsing.
Excluding the volatile components of food, energy and commercial services, producer prices rose 0.3% in June. The so-called core PPI increased 0.4% in May. In the 12 months to June, the core PPI advanced 6.4%, after rising 6.7% in May.
The market expects the Federal Reserve (Fed) to raise its interest rate by another 75 basis points later this month as it struggles to cool demand and bring inflation down to its 2% target. The US central bank has raised its overnight interest rate by 150 basis points since March.