A day after reporting an unexpected uptick in U.S. consumer prices, the Labor Department released a report on Friday showing U.S. producer prices also unexpectedly edged higher in the month of June.
The Labor Department said its producer price index for final demand inched up by 0.1 percent in June, matching the uptick seen in May. Economists had expected producer prices to come in unchanged.
The modest increase in producer prices came as a steep drop in energy prices was more than offset by continued service price growth.
The report said energy prices plunged by 3.1 percent in June after tumbling by 1.0 percent in the previous month, with gas prices plummeting by 5.0 percent.
Excluding food and energy prices, however, core producer prices climbed by 0.3 percent in June after rising by 0.2 percent in May. Core prices had been expected to show another 0.2 percent increase.
The bigger than expected increase in core prices came as service prices rose by 0.4 percent in June after climbing by 0.3 percent in May.
Prices for trade services soared by 1.3 percent in June after falling by 0.5 percent in May, while prices for transportation and warehousing services rose by 0.3 percent and prices for other services were unchanged.
Compared to the same month a year ago, producer prices in June were up by 1.7 percent, reflecting a slowdown from the 1.8 percent growth in May.
Meanwhile, the report showed the annual rate of core producer price growth was unchanged from the previous month at 2.3 percent.
“The small gain in producer prices in June suggests the increase in tariffs on $200bn of imports from China has yet to generate a pick-up in inflation and confirms that underlying domestic inflationary pressures remain subdued,” said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, “That should help ease any fears, following the June CPI figures released yesterday, that underlying consumer price inflation will rise back above 2%.”
On Thursday, the Labor Department released a separate report showing an unexpected uptick in U.S. consumer prices in the month of June.
The Labor Department said its consumer price index inched up by 0.1 percent in June, matching the slight increase seen in May. Economists had expected consumer prices to come in unchanged.
Excluding food and energy prices, core consumer prices rose by 0.3 percent in June after inching up by 0.1 percent for four consecutive months. Core prices had been expected to edge up by 0.2 percent.
Despite the unexpected monthly increase, the Labor Department said the annual rate of consumer price growth slowed to 1.6 percent in June from 1.8 percent in May.
Meanwhile, the report said the annual rate of core consumer price growth crept up to 2.1 percent in June from 2.0 percent in the previous month.
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