• Price index less food & energy eases as the coronavirus curbs demand.

• Core goods prices inch higher. 

• Service price decline led by trade services.

Pricing power remains weak in the industrial sector. The Producer Price Index for final demand fell 0.2% (-0.8% y/y) during June following a 0.4% May increase. It was the fourth decline in five months. A 0.4% increase had been expected in the Action Economics Forecast Survey. Underlying pricing pressure remained weak. Producer prices excluding food & energy eased 0.3% (+0.1% y/y), the third consecutive monthly decline. A 0.1% rise had been expected. Another measure of underlying pricing power is the PPI excluding food, beverages and trade services. It improved 0.3% last month (-0.1% y/y) after edging 0.1% higher in May.

A 5.2% decline in food prices held back the change in the PPI overall, almost reversing a 6.0% rise in May. A 44.5% decline (+4.5% y/y) in beef & veal prices led the falloff as it reversed a 69.1% jump, and the price of pork fell 15.2% (-4.4% y/y). Egg prices also weakened 12.7% (NSA) but rose 14.7% y/y. Oilseed prices were off 1.1% (+3.9% y/y). These declines were offset by an 11.9% increase (NSA, -2.9% y/y) in vegetable prices and a 6.1% increase (NSA, 1.7% y/y) in the cost of fresh fruit & melons. Bakery product prices held steady (1.0% y/y).

A 7.7% strengthening in energy prices countered the decline last month. Gasoline prices increased 26.3% (-36.3% y/y) following a 43.9% May rise. The cost of home heating oil surged 53.3% (-44.2% y/y) and natural gas prices rose 0.4% (0.1% y/y). The cost of electric power was off 0.4% (-1.3% y/y), down for the fourth month in the last five.

Final demand goods prices less food & energy edged 0.1% higher last month after holding steady in May. Prices for finished consumer goods less food & energy were unchanged (1.1% y/y). Core nondurable goods prices also held steady (+1.5% y/y) following years of strength. Women's apparel prices declined 0.7% y/y but men's clothing costs rose 0.6% y/y. Durable consumer product prices improved 0.4% y/y while household appliance prices rose 1.1% y/y.

For businesses, private capital equipment prices rose 0.1% last month (1.0% y/y) and added to the prior month's 0.2% rise.

Services prices for final demand slipped 0.3% in June, down for the fourth month in the last five. Trade services prices fell 1.8%, as the cost of trade of finished goods weakened 1.9% (+0.8% y/y). A 0.9% rise (-4.7% y/y) in transportation & warehousing services prices offset the decline. Excluding these costs, trade services prices improved 0.3% (0.1% y/y).

The cost of construction weakened 0.3% last month following a 0.1% easing.

Intermediate product prices increased 0.9% (-5.0% y/y), following a 0.1% uptick.

The PPI data can be found in Haver's USECON database. Further detail can be found in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

House Price Booms, Then and Now from the Federal Reserve Bank of Philadelphia is available here.