2024-07-12 18:47:09
Wholesale prices in the United States rose 2.6% compared to a year ago, a higher-than-expected figure and a sign that some inflationary pressures remain high.
The rise, which is the steepest year-on-year rise since March 2023, comes at a time when other price indicators show inflation is still easing.
The Labor Department reported on Friday that its producer price index, which tracks inflation before it reaches consumers, rose 0.2% from May to June, after remaining unchanged the previous month. Excluding food and energy prices, which tend to vary from month to month, so-called core wholesale prices rose 0.4% from May and 3% from June 2023.
The rise in wholesale inflation last month was driven by a significant 0.6% rise in services prices, which fueled higher profit margins at machinery and car wholesalers. But the profit margins of wholesalers and retailers – categorized as “merchant services” in the producer price report – can be highly volatile. In contrast, a measure of wholesale inflation including business services, food and energy was unchanged from May to June. This helps explain why few economists were alarmed by Friday’s unexpected rise in overall wholesale inflation.
In addition, general merchandise prices decreased by 0.5%. Gasoline prices fell 5.8% at the wholesale level. Food prices were also reduced.
The producer price index gives an early indication of where consumer inflation is headed. Economists also note it because some of its components, particularly health care and financial services, feed into the Fed’s preferred measure of inflation — the personal consumption expenditure index, or CPI. Some components of wholesale prices that the CTP maintains – such as some health care costs – were below expectations on Friday, hoping for continued progress towards lowering consumer price inflation, which would reassure the Fed.
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