- POSTED: 16 Jul 2014 22:33
US producer prices rebounded more sharply than expected in June after a dip in May, largely driven higher by energy prices, according to government data released on Wednesday.
WASHINGTON: US producer prices rebounded more sharply than expected in June after a dip in May, largely driven higher by energy prices, according to government data released on Wednesday.
The Labor Department said its producer price index rose 0.4 per cent in June, double the increase expected by analysts.
The PPI, an indicator of prices paid by producers of goods and services, fell 0.2 per cent in May, the first decline since August last year. It rose 0.6 per cent in April.
Leading the June increase were surging energy prices, up 2.1 per cent, the largest gain in more than a year. Gasoline prices leaped 6.4 per cent in the month that kicks off the summer vacation driving season.
Food prices fell 0.2 per cent, their second consecutive monthly decline.
Excluding food, energy and trade, sectors that can be volatile, core PPI rose 0.1 per cent, the department said. Stripping out just food and energy, core prices rose 0.2 per cent, in line with estimates.
Year-over-year, inflationary pressures eased. The PPI rose 1.9 per cent in June, after a 2.0 per cent gain in May.
"We see clear upside risk to the core PPI over the next few months," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
"The underlying economic story here, we think, is that firms are expecting to have to pay rather higher wages and are seeking offsetting price increases."
Producer inflation has been gradually building as the economy recovers from the severe 2008-2009 recession.
The Federal Reserve, with a dual mandate of price stability and maximum employment, is closely tracking price rises. Fed Chair Janet Yellen, in testimony to Congress on Tuesday, said that though inflation has moved up in recent months, it remained below the Fed 2.0 per cent target over the long run.
The Fed's preferred inflation measure, the personal consumption expenditures price index, stood at an annualised 1.8 per cent in May.