Producer prices in the U.S. increased by slightly more than expected in the month of June, according to a report released by the Labor Department on Wednesday, with the annual rate of price growth accelerating to its highest level in over six years.
The Labor Department said its producer price index for final demand rose by 0.3 percent in June after climbing by 0.5 percent in May. Economists had expected prices to edge up by 0.2 percent.
The report said energy prices increased by 0.8 percent in June after spiking by 4.6 percent in May, while food prices slumped by 1.1 percent after inching up by 0.1 percent in the previous month.
Excluding food and energy prices, core producer prices also climbed by 0.3 percent in June, matching the increase seen in May. Core prices had been expected to rise by 0.2 percent.
The increase in core prices in June was partly attributable to a 0.4 percent advance in prices for final demand services, which rose by 0.3 percent in May.
Prices for final demand trade services climbed by 0.7 percent, while prices for final demand transportation and warehousing services and final demand services less trade, transportation, and warehousing rose by 0.5 percent and 0.3 percent, respectively.
Compared to the same month a year ago, producer prices were up by 3.4 percent in June, representing the largest 12-month increase since a 3.7 percent jump in November of 2011.
The annual rate of growth in core producer prices also accelerated to 2.8 percent in June from 2.4 percent in May.
“The increase in final demand producer price inflation to a fresh six-year high in June was driven by another big gain in services prices, indicating that the tightening labor market are driving up inflationary pressures,” said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, “There were also signs that the steel and aluminum tariffs have begun to push up firms’ input costs, and it is likely to only be a matter of time before that shows up in higher consumer prices too.”
On Thursday, the Labor Department is scheduled to release a separate report on consumer prices in the month of June.
Consumer prices and core consumer prices are both expected to rise by 0.2 percent in June, matching the increases seen in May.
The material has been provided by InstaForex Company – www.instaforex.com