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U.S. producer prices fall 0.3% in June, biggest drop in 14 months
The Labor Department’s report also revised May’s PPI lower and showed core inflation pressures remain, with officials citing energy and AI-related prices as key risks for the Fed.
U.S. producer prices fell unexpectedly in June, dropping 0.3% for final demand, the biggest monthly decline in 14 months, according to data from the Labor Department cited by Reuters. The report came with a sharp downward revision to the Producer Price Index for May and followed a larger-than-expected decline in the monthly Consumer Price Index reported the prior day.
The June PPI data, along with signs of slower job growth in June, effectively removed expectations for a Federal Reserve rate increase at its upcoming meeting, Reuters said. However, economists warned that recent escalation in the Middle East conflict has shifted attention toward higher energy prices, which they said could still affect the Fed’s longer-term outlook.
Energy has become a key driver as oil prices climbed to a one-month high after the U.S. reimposed a naval blockade of Iran, Reuters reported. The PPI also showed additional price gains tied to the artificial intelligence build-out, a concern for central bank officials, leaving a rate hike later this year “on the table,” according to economists quoted by the outlet.
Underlying components showed goods prices declined 1.4% in June, with gasoline prices down 12% accounting for nearly two-thirds of the drop. Over the year through June, the headline PPI rose 5.5%, while a narrower measure excluding food, energy and trade edged up 0.1% for the month and increased 5.1% year over year, Reuters added.
Latest closeGasoline (RBOB) $3.114 ▼5.7%