WASHINGTON – U.S. producer prices increased more than expected in June amid rising costs for energy products, but underlying producer inflation appeared to have peaked.
The producer price index for final demand climbed 1.1% last month after rising 0.9% in May, the Labor Department said on Thursday. In the 12 months through June, the PPI increased 11.3%after advancing 10.9% in May.
A 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 rise in goods prices was attributed a 10.0% jump in energy prices. There were strong increases in the prices of gasoline, diesel fuel, electric power and residential natural gas. Wholesale food prices edged up 0.1%.
The cost of services rose 0.4% after climbing 0.6% in May.
Economists polled by Reuters had forecast the PPI rising 0.8% and increasing 10.7% year-on-year.
The government on Wednesday reported an acceleration in consumer prices in June, with the annual rate posting its largest increase since late 1981. Inflation is soaring, fueled by snarled global supply chains and massive fiscal stimulus from governments early in the COVID-19 pandemic.
Russia’s dragging war against Ukraine, which has caused a spike in global food and fuel prices, has worsened the situation. But there are some glimmers of hope that price pressures could be nearing a peak.
Crude oil prices have fallen sharply, with the global benchmark Brent trading below $100 per barrel after surging to $139 in March, which was close to the all-time high reached in 2008. Other commodity prices are also coming off the boil.
Excluding the volatile food, energy and trade services components, producer prices rose 0.3% in June. The so-called core PPI increased 0.4% in May. In the 12 months through June, the core PPI advanced 6.4% after rising 6.7% in May.
The Federal Reserve is expected to raise its policy rate by another 75 basis points at the end of this month as it fights to cool demand and bring inflation down to its 2% target. The U.S. central bank has hiked its overnight interest rate by 150 basis points since March.
(Reporting by Lucia Mutikani; Editing by Nick Zieminski)