U.S. Producer Prices Inch Up Less Than Expected In June, Annual Growth Slows To Just 0.1%

Following yesterday’s tamer-than-expected consumer price inflation data, the Labor Department released a separate report on Thursday showing producer prices in the U.S. also inched up by slightly less than expected in the month of June.

The Labor Department said its producer price index for final demand crept up by 0.1 percent in June after falling by a revised 0.4 percent in May.

Economists had expected producer prices to rise by 0.2 percent compared to the 0.3 percent dip originally reported for the previous month.

The report also said the annual rate of producer price growth slowed to just 0.1 percent in June from a revised 0.9 percent in May.

The pace of growth was expected to slow to 0.4 percent from the 1.1 percent originally reported for the previous month.

“Lower PPI inflation over the past few months reflects cooling supply side transitory inflation factors caused by the pandemic and the war in Ukraine,” said FHN Financial chief economist Chris Low.

He added, “Lower PPI inflation is a promising sign for the Fed, as some PPI components feed into the Fed’s preferred PCE inflation gauge, but is not enough to move markets or change the Fed’s mind about hiking in July.”

The monthly uptick in producer prices partly reflected a modest increase in prices for services, which rose by 0.2 percent for the second straight month.

While prices for transportation and warehousing services slumped by 0.9 percent, prices for trade and other services increased by 0.2 percent and 0.3 percent, respectively.

Meanwhile, the report said prices for goods were unchanged in June, as a 0.7 percent advanced by prices for energy offset falling prices for food and goods less food and energy.

The Labor Department said core producer prices, which exclude prices for food, energy and trade services, inched up by 0.1 percent in June after come in unchanged in May.

The annual rate of growth by core producer prices slowed to 2.6 percent in June from 2.8 percent in May.

A separate report released by the Labor Department on Wednesday showed consumer prices in the U.S. also increased by slightly less than expected in the month of June.

The Labor Department said its consumer price index rose by 0.2 percent in June after inching up by 0.1 percent in May. Economists had expected consumer prices to climb by 0.3 percent.

Excluding food and energy prices, core consumer prices still increased by 0.2 percent in June after rising by 0.4 percent in May. Core consumer prices were also expected to rise by 0.3 percent.

The Labor Department noted the uptick in core consumer prices reflected the smallest monthly increase since August 2021.

The report also showed the annual rate of consumer price growth slowed to 3.0 percent in June from 4.0 percent in May. Economists had expected the rate of growth to slow to 3.1 percent.

The annual rate of core consumer price growth also decelerated to 4.8 percent in June from 5.3 percent in May. The rate of growth was expected to slow to 5.0 percent.

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