U.S Wholesale Prices Increase in June

July 13, 2017 Share Print 0

The gain in U.S. wholesale prices reflected higher food and services costs, signaling modest inflation, a Labor Department report showed Thursday in Washington.

HIGHLIGHTS OF PRODUCER PRICES (JUNE)

Producer-price index rose 0.1% (est. 0.0%) after no change the previous month

PPI 2% from a year earlier after a 2.4% gain in the prior 12-month period

Excluding food and energy, gauge rose 0.1% from previous month and was up 1.9% from June 2016

Key Takeaways

Almost 80 percent of the increase in wholesale prices was due to a 0.2 percent gain in services as goods costs edged up 0.1 percent. A big factor behind the pickup in services costs was a 4 percent rise in prices for securities brokerage and investment advice.

Otherwise, price pressures in the production pipeline remain contained, keeping broader inflation below the Federal Reserve’s goal and helping explain why policy makers plan to raise interest rates only gradually.

The PPI excluding food, energy, and trade services — a measure some economists prefer because it strips out the most volatile components — increased 2 percent from June 2016, also indicating inflation is taking time to pick up.

Other Details

Excluding the volatile categories of food, energy, and trade services, producer costs rose 0.2 percent from the previous month following a 0.1 percent decline

Energy prices fell 0.5 percent from the prior month; food costs rose 0.6 percent

Goods inflation crept higher after falling 0.5 percent in May; services prices also climbed after a 0.3 percent advance

Profit margins at trade services including retailers and wholesalers were down 0.2 percent

Bloomberg

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Dean Popplewell

Vice-President of Market Analysis at MarketPulse

Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.