US wholesale prices return to growth in June
US WHOLESALE prices increased modestly in June, as indicated by data released on Thursday (Jul 13) by the Labor Department, due in large part to an increase in the cost of services.
The return to positive inflation after a contraction in May suggests wholesale prices remain buoyant in some areas.
The producer price index (PPI) ticked up by 0.1 per cent last month, after the earlier contraction.
This was slightly below the median expectation of economists in a survey by MarketWatch, of a 0.2 per cent rise.
“In short, PPI inflation surprised to the downside, and decelerated further to end the second quarter,” High Frequency Economics’ chief US economist Rubeela Farooqi wrote in a note to clients.
The fuel for the positive PPI reading in June came from final demand services, which registered an increase of 0.2 per cent due largely to a rise in the price of trade services demand, and other final demand services excluding transportation and warehousing.
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Prices for final demand goods in June were unchanged following a 1.6 per cent contraction in May.
The Federal Reserve is weighing the prospect of a further interest rate hike this month to bring down consumer inflation, which is falling but remains stuck above policymakers’ long-term target of 2 per cent.
Against this backdrop, analysts broadly predict that the central bank will push forward with another quarter percentage point hike after their Jul 25 to 26 meeting.
The latest inflation data is not likely to change the outcome of the upcoming Fed meeting, Farooqi said.
“The subsequent rate path is less certain and will depend on incoming data,” she added. AFP
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