Government data released on Friday showed the producer price index (PPI) rose 0.2% last month, double the rate of increase economists had expected.
Prices for the previous month were revised upwards, erasing what had been shown to be a slight decline. The revised producer price index for May showed prices were flat for the month, rather than down 0.2%.
Year-over-year, the PPI rose 2.6%. Economists had expected a 12-month increase of 2.3%. The previous month’s year-over-year increase was revised up to 2.4% from 2.2%.
The figures suggest that producer inflation accelerated in June.
Core PPI, which excludes food and energy prices, rose even further, to 0.4%, double what economists had expected, after upgrading their forecasts to a 0.3% increase from a flat reading in the previous month.
On a trailing-12-month basis, core prices rose 3 percent, up sharply from an upwardly revised 2.6 percent year-on-year increase in May, which was initially reported as rising 2.3 percent.
So-called core-core prices, which strip out volatile food and energy prices and wholesaler and retailer profit margins, were unchanged. That was lower than expected, suggesting that inflation squeezed corporate profit margins in June and undermining President Biden’s argument that corporate greed is causing inflation. Core-core prices have risen 3.1% this year.
The core-core index for the previous month was revised up to a 0.2% increase from flat growth. The annualized index for May was revised up to a 3.3% increase from a 3.2% increase.
The Producer Price Index (PPI) report dampened hopes of lower inflation sparked by Thursday’s Consumer Price Index report, which came in below expectations for the second consecutive month.
The Consumer Price Index reflects the prices paid by consumers for goods and services produced both domestically and abroad, whereas the PPI is limited to prices paid to domestic producers, but also includes prices paid by businesses and governments. The PPI is often mistakenly called the “wholesale price index”, but has no particular relationship to wholesale prices.
