Economic Report: June PPI Shows Continued Muted Inflation Pressures

Author photo

By

Senior economics reporter

Oil storage tanks at Valero Energy’s St. Charles Refinery in Norco, Louisiana. Energy prices fell sharply in June.

The numbers: The producer price index rose a modest 0.1% in June, indicating that inflation remains under wraps. Economists polled by MarketWatch had predicted a 0.1% fall.

The increase in wholesale inflation over the past year inched down to 1.7% in June, the lowest level in more than two years, the government said Friday.

Excluding food, energy and trade margins, the so-called core PPI rate was flat last month after two straight months of 0.4% gains. The yearly rate of increase in core prices decreased to 2.1% from 2.3%.

What happened: Within the main subcomponents, prices for goods fell 0.4%, the most since January. More than 60% of the drop can be traced to a 5% decline in gasoline prices, the government said. Energy prices dropped 3.1% in June. Wholesale food costs rose 0.6%.

Corn prices jumped 19.9% due to tough growing conditions. That’s the biggest gain in almost 4 years.

The index for final demand of services rose 0.4%, the largest increase since last October. Trade services jumped 1.3% after two straight declines.

Big picture: Low inflation is giving the Federal Reserve room to cut interest rates. Fed Chairman Jerome Powell told Congress this week that many officials were ready to ease policy given the uncertainty that was weighing on the economy.

What are they saying? “Through the volatility, upward momentum in the core data has faded a bit in recent months,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.

Market reaction: Stocks opened higher on Friday. The Dow Jones Industrial DJIA, +0.46%  was up 135 points in morning trading.

RECENT NEWS

US Stock Market Pulls Back, Ending Multi-Day Rally Amid Inflation Jitters

The US stock market experienced a significant pullback today, ending a multi-day rally as investors grew increasingly ji... Read more

Investor Confidence Boosted As BT's CEO Allison Kirkby Challenges Short Sellers And Raises Dividend

BT Group’s shares have surged by 17% following a series of bold announcements by CEO Allison Kirkby. Kirkby’s assert... Read more

Market Optimism As S&P500 Briefly Peaks Amid Falling Inflation

The S&P500 index saw a brief all-time high as new data revealed a drop in America's annual inflation rate to 3.4% in... Read more

Sony's Strategic Share Buyback: Impact On Stock Performance

In a bold move signaling confidence in its financial stability and future growth prospects, Sony recently announced a si... Read more

The Hidden Costs Of Investing In BDCs

Business Development Companies (BDCs) are often lauded for their attractive yields, appealing to investors seeking subst... Read more

The Case For Hedging Foreign Exchange Exposure Amidst Economic Divergence

In today's global economy, characterized by increasing economic divergence among major nations, investors face a dauntin... Read more