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Economy in Brief

U.S. Producer Price Inflation Accelerates to 11.3% Y/Y in June
by Winnie Tapasanun  July 14, 2022

• Energy prices surge a record 10.0% m/m and a record 54.4% y/y.

• Core goods prices remain high: +0.5% m/m; +9.1% y/y.

• Services prices rise for the 17th time in 18 months.

The Producer Price Index for Final Demand rose 1.1% m/m in June after rises of 0.9 in May (+0.8% initially) and 0.4% in April, according to the Bureau of Labor Statistics. The June rise was the 19th straight m/m gain and the largest since March's 1.6%. The year-over-year rate accelerated to 11.3% in June, the highest since March, from 10.9% in May. A 0.8% m/m rise had been expected in the Action Economics Forecast Survey. The June PPI rise was in line with the June CPI released yesterday (1.3% m/m; 9.1% y/y), supporting the view that U.S. inflation from both producer and consumer sides is intensifying.

Producer prices less food, energy & trade services increased 0.3% (6.4% y/y) in June after a 0.4% gain in May (+0.5% initially). The PPI less food & energy rose 0.4% (8.2% y/y) after rising 0.6% (+0.5% initially). A 0.5% m/m increase had been expected for the core PPI.

The June PPI rise was led by a 10.0% jump in energy prices, the six successive monthly rise to a record high, following a 1.4% December drop; the y/y rate accelerated to a record 54.4% from May's 44.9%. Gasoline prices surged 18.5% (86.7% y/y) in June, the biggest m/m gain since December 2020, after an 8.6% rebound in May. Natural gas prices jumped 6.6% (33.9% y/y), the largest of 20 consecutive m/m rises. Home heating oil prices, however, fell 1.7% (+100.8% y/y), the first m/m fall since November, after a 3.5% gain.

Food prices ticked up 0.1% (12.7% y/y) in June, the sixth consecutive m/m increase, after a 0.5% rise in May (0.0% initially). Food prices for exports rose 1.0% (14.4% y/y) and government purchased food prices rose 0.2% (9.1% y/y), but finished consumer food prices slipped 0.1% (+12.7% y/y) following five successive m/m increases.

The PPI for goods less food & energy grew 0.5% (9.1% y/y) in June after a 0.6% increase in May, continuing its string of increases since June 2020. Prices for final demand finished goods less food & energy rose 0.7% (8.8% y/y) on top of a 0.8% rise. Finished consumer goods prices less food & energy increased 0.6% (8.4% y/y) after a 0.8% gain, with durable consumer goods prices up 0.5% (8.4% y/y) and core nondurable consumer goods prices up 0.7% (8.3% y/y). Prices for private capital equipment grew 0.7% (9.3% y/y), continuing their string of gains since November 2020, with prices for private capital equipment for manufacturing industries up 0.6% (12.2% y/y) and prices for private capital equipment for nonmanufacturing industries up 0.8% (8.5% y/y).

Services prices increased 0.4% (7.7% y/y) in June after a 0.6% May gain and a 0.1% April downtick, registering the 17th m/m rise in 18 months. Trade services prices rose 0.8% (14.8% y/y) in June, the eighth m/m gain in nine months, after a 1.0% rebound in May. Services prices less trade, transportation & warehousing inched up 0.1% (2.7% y/y) after a 0.1% uptick.

Construction product prices rose 0.5% in June (19.2% y/y) after a 0.3% May increase, continuing their string of increases since January 2021. Construction product prices for government grew 0.5% (15.9% y/y), the 17th m/m gain in 18 months. Construction product prices for private capital investment rose 0.6% (21.0% y/y), having been rising since January 2021.

Intermediate goods prices advanced 2.3% (22.2% y/y) in June, the sixth straight m/m rise, after a 2.1% increase in May, led by a 9.9% gain (60.1% y/y) in processed fuel costs.

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.

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