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Economy in Brief

U.S. Producer Prices Jump More Than Expected in June
by Tom Moeller  July 14, 2021

• Core final demand goods prices strengthen.

• Service price increases also accelerate.

• Energy prices continue to climb.

The Producer Price Index for final demand strengthened 1.0% (7.3% y/y) in June following a 0.8% May rise. The year-to-year increase is the largest in the series history, dating back to 2009. The index has risen at a 12.4% annual rate so far this year. A 0.6% rise for last month had been expected by the Action Economics Forecast Survey. The PPI excluding food and energy prices also rose 1.0% (5.6% y/y) in June after two months of 0.7% increase. The index has risen at a 10.0% annual rate during the last six months. A 0.5% June increase had been expected. The PPI less prices of food, energy and trade services rose 0.5% m/m (5.5% y/y), also following two months of 0.7% gain.

Prices for final demand goods increased 1.2% (11.7% y/y) in June after rising 1.5% in May. Final demand goods less foods and energy rose 1.0% (6.9% y/y) in June, after 1.1% and 1.0% increases in the prior two months. Core finished consumer goods prices rose 0.6% (3.7% y/y) about the same as in the prior three months. Durable goods prices surged 1.1% (4.9% y/y) following two straight 0.8% increases and the cost of core nondurable goods rose 0.3% (2.9% y/y) for a second month. Capital equipment prices gained 0.8% (3.6% y/y) for the second consecutive month.

Energy prices for final demand surged 2.1% (35.2% y/y following a 2.2% May rise. Gasoline prices strengthened 2.8% (81.1% y/y) after gaining 2.2% and the cost of home heating oil rose 5.6% (95.6% y/y following a 6.9% jump. Finished food prices rose 0.8% (7.2% y/y) after a 2.6% and 2.1% gains in the prior two months. The cost of beef & veal surged 5.6% (41.4% y/y) following two months of double-digit increases. Fresh fruit & melon prices gained 2.6% (3.7% y/y) and vegetables prices strengthened 1.6% (-20.9% y/y). Dairy products costs eased 0.5% (+4.0% y/y).

Final demand services prices increased 0.8% (5.2% y/y) in June following two months 0.6% gain. Trade services prices surged 2.1% (5.8% y/y) after a 0.7% increase. Prices for final demand transportation and warehousing services rose 0.9% (8.2% y/y) after spiking 1.9% in May. Prices for services less trade, transportation, and warehousing rose 0.3% (4.7% y/y) after a 0.2% rise.

Construction costs increased 0.7% (3.5% y/y) in June after rising 0.6% and 1.1% in the prior two months.

Intermediate goods prices jumped 1.9% (22.6% y/y) in June after a 2.8% May surge.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver's USECON database. Further detail is contained in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

Semiannual Monetary Policy Report to the Congress by Fed Chair Jerome H. Powell is available here.

Producer Price Index (SA, %) Jun May Apr Jun Y/Y 2020 2019 2018
Final Demand 1.0 0.8 0.6 7.3 0.2 1.7 2.9
   Excluding Food & Energy 1.0 0.7 0.7 5.6 0.9 2.1 2.6
   Excluding Food, Energy & Trade Services 0.5 0.7 0.7 5.5 0.7 2.0 2.8
   Goods 1.2 1.5 0.6 11.7 -1.4 0.4 3.4
      Foods 0.8 2.6 2.1 10.9 1.3 1.9 0.2
      Energy 2.1 2.2 -2.4 35.2 -12.8 -4.6 10.2
    Goods Excluding Food & Energy 1.0 1.1 1.0 6.9 0.7 1.4 2.5
   Services 0.8 0.6 0.6 5.2 0.9 2.3 2.6
      Trade Services 2.1 0.7 0.5 5.8 1.7 2.4 1.8
   Construction 0.7 0.6 1.1 3.5 2.3 5.0 4.1
Intermediate Demand - Processed Goods 1.9 2.8 1.6 22.6 -2.8 -1.4 5.3
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