U.S. Producer Prices Rise for Second Straight Month

U.S. producer prices rose more than expected in June as the cost of gasoline and a range of other goods rose, indicating the recent oil-driven downward spiral in prices was abating.

Signs of firming inflation support views the Federal Reserve will raise interest rates later this year.

The Labor Department said on Wednesday its producer price index for final demand increased 0.4 percent last month after increasing 0.5 percent in May. It was the second straight month of increase in producer prices.

A 0.7 percent increase in goods prices accounted for nearly two-thirds of the increase in the PPI last month.

In the 12 months through June, the PPI fell 0.7 percent after declining 1.1 percent in May. It was the fifth straight 12-month decrease in the index.

Economists polled by Reuters had forecast the PPI rising 0.2 percent last month and falling 0.9 percent from a year ago.

A plunge in crude oil prices and a resurgent dollar have subdued producer inflation and dampened overall domestic price pressures. Inflation is stabilizing as oil prices steadily rise, but a strong dollar suggests any increase will be gradual.

A report on Tuesday showed broad weakness in import prices in June, underscoring the impact of the dollar’s 11.6 percent appreciation against the currencies of the United States’ main trading partners since June 2014.

Reuters

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.