With energy prices showing another substantial increase, the Labor Department released a report on Thursday showing that U.S. producer prices rose by more than expected in the month of June.
The Labor Department said its producer price index for final demand climbed by 0.5 percent in June after rising by 0.4 percent in May. The index had been expected to increase by 0.3 percent.
The advance by the producer price index in June reflected the biggest monthly increase since May of last year.
The bigger than expected increase in producer prices was partly due to the continued jump in energy prices, which spiked by 4.1 percent in June after jumping by 2.8 percent in May. Gasoline prices soared by 9.9 percent.
The report also showed that food prices climbed by 0.9 percent in June after rising by 0.3 percent in the previous month.
Excluding food and energy prices, core producer prices rose by 0.4 percent in June following a 0.3 percent increase in May. Economists had expected core prices to edge up by 0.2 percent.
The core price growth in June was partly due to a 0.4 percent increase in prices for services, which came on the heels of a 0.2 percent uptick in May.
Prices for trade services climbed by 0.7 percent, while prices for transportation and warehousing services increased by 0.5 percent and prices for other services rose by 0.4 percent.
The report also showed that the annual rate of change in producer prices swung to a gain of 0.3 percent in June from a drop of 0.1 percent in May.
Additionally, the annual rate of core producer price growth accelerated to 1.3 percent in June from 1.2 percent in the previous month.
Sophia Kearney-Lederman. Economic Analyst at FTN Financial, said, "If energy prices hold steady in the second half of this year, expect the trickle up effect to continue to give wholesale prices a gentle boost."
"Tomorrow morning, the CPI report will be more actively traded, in conjunction with retail sales for the last month of the second quarter," she added.
The Labor Department is scheduled to release its more closely watched monthly report on consumer price inflation on Friday.
The consumer price index is expected to rise by 0.3 percent, while core consumer prices are expected to edge up by 0.2 percent.
by RTT Staff Writer
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