U.S. producer inflation continued to moderate in June on a year-over-year basis, total PPI was up just 0.1% year-over-year, versus 1.1% in May & 2.3% in April. Rising the least since the 2020 fall. Excluding food and energy, PPI was up 2.4% down from 2.8% year-over-year in May and 3.2% in April. Producer Price Index for final demand increased 0.1% month-over-month in June (consensus 0.2%) following a downwardly revised 0.4% decline (from -0.3%) in May.
The core index for final demand, less foods and energy, also increased 0.1% month-over-month (consensus 0.2%) following a downwardly revised 0.1% increase (from 0.2%) in May. Wholesale inflation is moving lower, which should be pleasing to the Fed and a reprieve for corporate profit margins.
The release was in line with a moderating Consumer Price Index we saw yesterday. In turn that brings back to the fore the Fed’s monetary policy path with moderation in pipeline measures.
The Federal Reserve has been on an aggressive path to reducing historically high U.S. inflation, we are a long way from the Central Bank transitory mantra.
June 2023 PPI
US PPI Highlights.
- US PPI Final Demand (M/M) Jun: 0.1% (exp 0.2%; Prev -0.3%)
- US PPI Ex Food and Energy (M/M) Jun: 0.1% (exp 0.2%; Prev 0.2%)
- US PPI Final Demand (Y/Y) Jun: 0.1% (exp 0.4%; Prev 1.1%)
- US PPI Ex Food And Energy (Y/Y) Jun: 2.4% (exp 2.6%; Prev 2.8%)
Annual producer inflation eased for an 11th straight month to to 1.1%, the least since December 2020.
Where the price gains were:
- Services costs went up 0.2%, the same as in May, led by a 5.4% advance in deposit services.
- The cost of food and alcohol retailing, traveler accommodation services, insurance, hospital inpatient care, and airline passenger services also moved higher.
- Price increases for gasoline (3.4%), electric power, beef and veal, chicken eggs, medical, surgical, and personal aid devices
Where the price losses were:
- Truck transportation of freight declined by 2.1%.
- Goods cost was unchanged, following a 1.6% decline in May.
- Decreases in iron and steel scrap (-10.8%), diesel fuel, oilseeds, industrial chemicals, and residual fuels.
US PPI
US Core PPI
US May CPI
PPI was released after consumer price data for June. Annual inflation cooled for the eleventh straight month on a year-over-year basis, decelerated to 3.0% from 4.0% in May, marking its smallest increase since March 2021, while core CPI decelerated to 4.8% from 5.3% in May. The slowdown is partly due to a high base effect from last year when a surge in energy and food prices pushed the headline inflation rate to 1981-highs of 9.1%.
On a monthly basis, CPI was up 0.2% month-over-month (consensus 0.3%) with the index for shelter was the largest contributor again, 70% of the increase. Core CPI, which excludes food and energy, was also up 0.2% month-over-month (consensus 0.3%), which was the smallest month-over-month change since August 2021. The Federal Reserve would be relieved from the report.
The FOMC meets later today to announce its latest move on interest rates.
Source BLS
From the Traders Community News Desk